Devising  an  Integrated  Model  of  SME  internationalization  in  the  Context  of  Nordic  Lifestyle  Brands    

BACHELOR THESIS WITHIN: Major in Business Administration NUMBER OF CREDITS: 15  PROGRAMME OF STUDY: Marketing Management AUTHOR: Markus Sjögren and Michael Tervanen TUTOR: Zehra Sayed JÖNKÖPING  May 2016

A  qualitative  study  on  the  internationalization  efforts  of  Finnish  and  Swedish  lifestyle  brands      

i

Acknowledgements The process of writing this thesis has been an educational journey. For helping us through this journey, we would first like to thank our tutor Zehra Sayed for guiding us through this process. Secondly, we would like to thank our friends and families for supporting us and listening to our endless out-of-context blabber about sections of this study. We also would like to thank Kyrö Distillery, Sneaky Steve, Mr. Bear Family and Kasperi for allowing us to take an in-depth look into the internationalization efforts of their companies. A special tribute is to be made to Google Docs and Evernote for facilitating real-time collaborative work and for allowing us to take the process of writing this thesis into the modern era. Last but not least, the authors would like to thank one another for completing the process of writing a thesis together and for the incredible learning experience that will be looked back upon with gratitude for years to come.

       

________________________________ Markus Sjögren

________________________________ Michael Tervanen

ii

Bachelor Thesis in Business Administration

Title: Devising an Integrated Model of SME internationalization in the Context of Nordic Lifestyle Brands

Authors: Markus Sjögren

Michael Tervanen

Tutor: Zehra Sayed

Date: 23.05.2016

Keywords: SMEs | Internationalization | Lifestyle Brands | Integrated Model of SME Internationalization

 Abstract Internationalization of SMEs is field of study that has been emerging since the mid 20th century. Current literature continuously evolve to explain the changes in SME internationalization behaviors. The most renowned perspectives on the matter include stage models, such as the Uppsala and the Innovation models, international entrepreneur perspectives, network approaches and resource-based views. These various perspectives both overlap and compete in trying to explain certain aspects of the internationalization efforts of SMEs. This research devises an integrated model of SME internationalization efforts by reviewing literature and conducting a qualitative study, adopting an interpretivist philosophy with using an inductive and an abductive method of reasoning, on four Nordic lifestyle brands: Kyrö Distillery, Sneaky Steve, Mr. Bear Family and Kasperi. The study is build on analyzing key elements and interrelationships in the internationalization efforts of SMEs, from the perspective of the entrepreneurs. Not only does the model aim to be an inclusive internationalization model but also demonstrates the interrelations between the different Elements and theories discussed. The study identified 11 themes which were divided between four interrelated elements: Firm, Networks & OKC (Opportunity and Knowledge Creation), Product & Brand and External Support. Mutually beneficial interrelations between the elements were also recognized. The study also found that the type of branding, in this case lifestyle brands, might not be an indicator of the internationalization patterns of that company. However, the aspirations of the entrepreneurs affected the patterns of internationalization. The limitations of the study were in the small pool of companies interviewed as well as its focus of reflecting on established SME internationalization theories. Further studies can help identifying more important themes in the internationalization of SMEs and determining what are the themes that most affect the internationalization patterns of SMEs.

 

iii

 Abbreviations SMEs - Small and medium-sized enterprises MNEs - Multinational enterprises NLB - Nordic lifestyle brands RBV – Resource-based view INVs – International New Ventures                                                  

iv

 Table of Contents 1 Introduction ................................................................................... 1

2 Problem .......................................................................................... 2

3 Purpose ........................................................................................... 3

4 Research Questions ....................................................................... 3

5 Perspective ..................................................................................... 4

6 Delimitations .................................................................................. 4

7 Definitions ...................................................................................... 4

8 Frame of Reference ....................................................................... 5 8.1 Introduction to Frame of Reference .................................................................... 5 8.2 Uppsala Model .................................................................................................... 5 8.3 Innovation Models .............................................................................................. 6 8.4 Network Approaches .......................................................................................... 7 8.5 Resource-Based Views ....................................................................................... 8 8.6 International Entrepreneur Perspectives ........................................................... 10 8.7 Conceptual Model of Internationalization ........................................................ 10

9 Methodology ................................................................................ 11

10 Method ......................................................................................... 13 10.1 Research Approach ........................................................................................... 13 10.2 Primary Data ..................................................................................................... 13 10.3 Reliability of Qualitative Data .......................................................................... 13 10.4 Selection of Participants ................................................................................... 14 10.5 Interview Design ............................................................................................... 14 10.6 In-Depth Interviews .......................................................................................... 15 10.7 Thematic Analysis ............................................................................................ 15 10.8 Data Analysis .................................................................................................... 16

11 Empirical Findings ...................................................................... 16 11.1 Identified Themes ............................................................................................. 16 11.2 Kyrö Distillery Company (B1) ......................................................................... 18 11.3 Sneaky Steve (B2) ............................................................................................ 21 11.4 Mr. Bear Family (B3) ....................................................................................... 24 11.5 Kasperi .............................................................................................................. 26

12 Data Analysis ............................................................................... 30 12.1 T1+T2+T3: Interfirm attributes ........................................................................ 30 12.2 T4+T5: Product and Brand ............................................................................... 32 12.3 T6+T7+T8: Networks and Opportunity Creation ............................................. 34 12.4 T9+T10: Support Activities .............................................................................. 36 12.5 T11: Awareness of Capabilities and Limitations .............................................. 38 12.6 Integrated Model of SME Internationalization ................................................. 39 39

v

13 Conclusion .................................................................................... 42

14 Discussion ..................................................................................... 43

15 References .................................................................................... 45

16 Appendix ...................................................................................... 49 16.1 Appendix 1: In-Depth Interview Design .......................................................... 49 16.2 Appendix 2: Thematic Analysis ....................................................................... 52

Tables and Figures Tables Table 1: Thematic Analysis ........................................................................................ 17

Figures Figure 1: Integrated Model of SME Internationalization ........................................... 39 Figure 2: Abstract Illustration of Interview B3 ........................................................... 41

1

1   Introduction

The area of internationalization is no field alien to research on organizations. Multinational Corporations (MNEs) made up the bulk of the studies in the mid-20th century and it is only quite recently that Small and Medium-Sized Enterprises (SMEs) have caught the attention of researchers (Antoncic, 2006). According to Ruzzier et al. (2006), the term internationalization came into use following the era of imperialism where cross-border interactions between markets and organizations became more frequent. Following the Second World War, economic activities expanding beyond the borders of a host market became more frequent and internationalization remained the only form of cross-border economic activity until a second pattern was observed where MNEs started to view processes and procedures of the organization as something that could be managed and adapted for global marketplaces. This is when the term globalization came into existence (Ruzzier et al., 2006). However, these theories are principally appropriate for MNEs and according to Ruzzier et al. (2006) are not the best fit in application of the internationalization process of SMEs. The increase of SME cross-border activities has sparked interest in the theories of SME internationalization which has become a growing topic of interest as seen in the surge of studies (Johanson and Vahlne, 1977, 1993, 2009; Gankema et al., 2000; Andersson, 2000; Ahokangas, 1998; Johanson and Mattson, 1993). It may be the reduced impact of national borders caused by factors like free trade areas, advancements in technology or even faster methods of shipping product around the globe that have caused SMEs to expand beyond the limits of their respective host market, naturally causing an escalated interest by academics to study these activities. The Uppsala model, devised by Johanson and Vahlne in 1977, first revisited and revised in 1990, then again in 2009 was one of the pioneering models explaining the internationalization behavior of SMEs. Following both praise and opposition, several other models have been introduced including the Innovation Models, models where networks are in focus, resource-based approaches and models focusing on the international entrepreneur. A limitation of many of these studies is that they treat SMEs as the same having not differentiated the different types of SMEs there are and the different focuses of these SMEs. Some literature present case study based research to overcome this limitation where either a whole industry (Childs and Jin, 2014) or a set of companies (Lopez and Fan, 2009; Woo and Jin, 2014) are in focus to conduct theory-testing research to determine the relevance and applicability of current internationalization models to specific industries and organizations. Exporting SMEs are reported to be growing faster than the non-exporting SMEs (UPS, 2015). In general, the increasing opportunities in cross-border activities due to relieved trade barriers and technological advances, this in turn makes access to knowledge about SME internationalization more in demand. The entrepreneur perspective in SME internationalization research is still under-represented which also may contribute to a theory-practice gap of managers not using theory as a guideline to strategic decision making (Martin, 1979; Nicholas et al., 2011). Therefore, this study aims to reflect on the current literature of SME Internationalization and conduct an empirical study to create a platform for a more integrated and inclusive model of SME

2

Internationalization. The objective is to create a holistic integrative model that can be used in management planning and that helps managers understand the current theories better. The Nordic region is chosen as the context of the study, Sweden, Denmark, Norway, Finland and Iceland make up the region. The Nordic region is recognized for its progressive attitudes in aspects ranging from politics to education and the countries are relatively similar with regards to their socio-cultural structure (Hofstede, 2016). Among the various commonalities of the Nordic region, design may be one of the most celebrated ones. From the 1950s to this day the region has been known for its architecture and design (the Guardian, 2015), and in more recent years the region has yielded a significant contribution relative to its size in the creative fields of fashion and furniture design (Highsnobiety, 2015; the Guardian, 2015). Brands operating in these and similar industries can be characterized as lifestyle brands, because they attempt to relate to the consumer through positioning their brand to a desired lifestyle or a lifestyle that reflects their own personality (Cătălin and Andreea, 2014). Since there is obvious creative potential in these field in the Nordic region this study is interested in reflecting on the internationalization of SMEs in the context of Nordic Lifestyle Brands.

2   Problem

In a study on the gap between theory and practice in business planning systems Martin (1979) concludes that “corporate planning as advocated by the theorists is not being practiced in any developed form”. Nicholas et al. (2011) argues that the level of importance that organizations place on the best practices of new product development does not align with the proposed theories. The gap between theory and practice will always exist and may serve the function of an idea for a new model. Theories overlap and generalize in order to explain a maximum number of situations, however due to their nature of having a particular perspective, individual theories are better at explaining some cases than others. In the context of theories regarding the internationalization of SMEs both the well-known Uppsala model (Johanson and Vahlne, 1977, 1993, 2009) and Innovation models (Gankema et al., 2000; Bilkey and Tesar, 1977; Cavusgil, 1980; Reid, 1981; Ahokangas, 1998) treat the internationalization of SMEs as incremental stages although the Uppsala model emphasizes increased commitment and gradual learning while the Innovation models accentuates that internationalization is innovation for the organization (Ruzzier et al., 2006). Similarly, some network perspectives on SME internationalization, such as the model by Johanson and Mattson (1993) recognizes the gradual learning process, although the focus here being on internationalization happening as a result of between firms. Much like the overlap between the Uppsala model and certain Innovation models, network perspectives (Johanson and Mattsson, 1993; McAuley, 1999) and resource-based views (Conner, 1991; Montgomery and Wernerfelt, 1997) on internationalization have been described as going “hand-in-hand” (Ruzzier et al., 2006). With reference to the RBV model developed by Ahokangas (1998), Ruzzier et al. (2006) elaborates on that statement by saying that “in both theories, internal and external resources available to the firm are seen as constituting the total set of resources available to the

3

firm. In order to gain access to strategic resources, firms may co-operate vertically, with respect to the product flow, or horizontally with competitors in other worlds by entering into network relations”. The problem in current literature on SME internationalization is that, as previously identified, the models overlap and that there is a theory-practice gap between management planning and theories (Martin, 1979; Nicholas et al., 2011). The currently influential SME internationalization models touch upon important factors however since they also overlap, hence they are not mutually exclusive. This creates an interesting opportunity to explore the possibility of creating a more inclusive integrated model of SME internationalization based on interviews with SMEs that articulate the process of internationalization from the entrepreneurs’ perspective with respect to the current literature.

3   Purpose

As discussed in the problem, current models on internationalization overlap. Instead of opposing and proposing a completely new model, the authors of this study recognize that current models have significant benefits. Therefore, this research focuses on the problem by integrating several theories to create an inclusive and holistic overview of SME Internationalization. Therefore, the purpose of this study is to contribute to existing literature on the internationalization process of SMEs with an integrated model of existing theories on the matter, in the context of Nordic lifestyle brands. Recognizing the vast amount of literature that treats SMEs as a whole, as well as the identifying the Nordic region as an interesting socio-cultural area of exploration, the purpose of this study is also to explore the important elements, interrelationships and processes in the internationalization efforts of a specific type of SMEs where the linking factor is not the industry they operate in, but the region and the method of branding they practice i.e. Nordic lifestyle brands. The two research focuses go hand-in-hand and are summarized as follows: 1) the primary aim is to use qualitative data connected to existing literature with the aim of devising an integrated model of SME internationalization and 2) secondly, using the qualitative data to reflect on what models currently reflect the internationalization efforts of Nordic lifestyle SMEs most accurately. The research questions devised from this are formulated in the section below.

4   Research Questions

1)   From an entrepreneurial perspective, what are the key elements and interrelationships of SME internationalization and how can these be complied into

an integrated model of SME internationalization?

2)   Which theories on SME internationalization most holistically reflect the internationalization process of Nordic lifestyle brands?

4

5   Perspective

This study takes on the perspective of the entrepreneurial team behind the Nordic lifestyle brands in focus of this study. The reason for this is because the founders and entrepreneurs of small companies, often have a holistic view about the various processes in the organization including but not limited to the startup process of the organization, the product development process, the company’s branding strategy and their overall internationalization initiation and process. This study does not take the perspective of the employees as their familiarity with the various developments in the firm over time may be limited, nor does this study take on the consumer perspective as the key is to gain critical information from managers with significant knowledge about the firm.

6   Delimitations

This study does not aim to develop an original model of SME internationalization due to a recognizable limitation of a current model but as stated in the purpose, from interviews with SMEs, the purpose is to devise an integrated model of existing internationalization theories of SMEs, from the perspective of the entrepreneurs in the context of Nordic lifestyle brands. This study does also not aim at opposing existing internationalization theories although in the analysis of the qualitative data collected it may emphasize a failure to stress certain aspects of the internationalization process in existing models, which may be discussed in the process of devising the integrated model of SME internationalization. This study will also only include two countries in the Nordic region; Finland and Sweden. Lastly, this study does not aim to include every existing model, study and perspective on SME internationalization, rather a chosen pool of the most established theories, as the scope of such a process would be too broad for a study of this nature.

7   Definitions

It can be assumed that there is a general consensus over the definitions of certain concepts and terminology that is used in this study, e.g. SMEs, MNEs etc. However, this section of the study intends to clarify concepts that may be perceived differently depending on the perspective. The definitions stated below remain definite throughout this study. Lifestyle brands are brands that aim at appealing to consumers that want to associate their choice of brands with their personal and social identity. In addition, as expressed in the study by (Cătălin & Andreea, 2014) “…consumers not only use brands as instruments for expressing their own identity… But also for projecting an individualized image of a desired lifestyle”. Therefore, the definition of lifestyle brands that holds true in this study, based on the study by (Cătălin & Andreea, 2014) is that they are brands targeting consumers who want the choice of brands to reflect their personal and social identity as well as conveying a desired lifestyle. The countries that encompass Nordic region are often confused and used interchangeably with the term Scandinavia. Therefore, with the intention of clarifying

5

all concepts that may be perceived differently, this term too needs to be clarified. The Nordic region is an area larger than the Scandinavian region, however, all countries included in the Scandinavian region are included in the Nordic region. The countries that make up the Nordic region are Denmark, Finland, Iceland, Norway and Sweden including the Faroe Islands and Greenland which are both parts of the Kingdom of Denmark and Åland, part of the Republic of Finland. The Scandinavian region incorporates only Denmark, Norway and Sweden, obtaining its name from the geographical term for the Scandinavian Peninsula (Norden, 2016).

8   Frame of Reference

As the purpose of this study is 1) to devise an integrated model of SME internationalization and 2) to explore the internationalization process of Nordic Lifestyle brands, the frame of reference is structured the following manner. Following a brief introduction to the scope of the frame of reference, the primary research question will be the emphasis of the first section. The frame of reference ends with a look at current literature on existing integrated models.

8.1   Introduction to Frame of Reference To successfully devise an integrated model, an adept understanding of some of the most renowned models and theories is fundamental. It would be impossible to integrate all existing theories and concepts regarding the internationalization process of SMEs, thus in alignment with the scope of this research this frame of reference takes a look at both preceding and current perspectives on the internationalization of SMEs most frequently discussed in modern literature on the subject matter. These perspectives include the incremental models, such as the Uppsala model and Innovation models, various network approaches to internationalization, more current resource-based views (RBV) on internationalization, models focusing on the international entrepreneur and lastly a conceptual model of internationalization is presented although the purpose of the model has more applicability in the methodology section of this study.

8.2   Uppsala Model Based on empirical observations from previous research by the authors, the internationalization process model, which only later became known as the Uppsala model, was developed to explain the “…gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign market” (Johanson & Vahlne, 1977). Grounded on previous research (Cyert & March, 1963; Aharoni, 1966; Penrose, 1959), the model aimed at explaining observations the authors made from their own previous research on Swedish SMEs. One such observation was the pattern of psychic distance, defined as the relative market closeness to the domestic market, making references to the works of Hornell, Vahlne & Wiedersheim-Paul (1972). In their conclusion of the study, they argued that the model devised would be a good planning tool for firms seeking strategies in internationalization. This, however, was one of the main critiques the model received, leading to a revision of their own model in 1990.

6

In Johanson and Vahlne’s article (1990) titled “The Mechanisms of Internationalization” the criticism is discussed making references to the works of Reid (1983) who argues that the model is deterministic. This means that if firms use the Uppsala model proposed in 1977 as a planning tool, which was one of the applications that Johanson and Vahlne argued, then instead of making strategic decisions based on what is profitable for the focal firm, the firm would follow the sequential steps proposed by the model. These steps may not be successfully strategic decisions for the focal firm. Another criticism of the model was proposed by Nordström (1990) who argues that the concept of psychic distance has lost its relevance as the world is more homogenous and that firms don’t necessarily internationalize to closely related markets anymore (Johanson & Vahlne, 1990). In their revised model from 1990, Johanson and Vahlne discuss the importance of relating the process of internationalization to the network firms are a part of. According to the authors, “the relationships are connected by networks which develop as a consequence of the interaction between firms” (Johanson & Vahlne, 1990). They expand on this by stating that “business relationships and consequently industrial networks are subtle phenomena, which cannot easily be observed by an outside observer, i.e. a potential entrant” (Johanson & Vahlne, 1990). The role of networks is argued as having an impact on market knowledge, introduced in their initial model (1977). In their latest revision of the model, Johanson and Vahlne (2009) elaborate on the importance of networks and introduce the terminology liability of outsidership. They define the concept by stating that “a firm that does not have a position in a relevant network is an outsider. If a firm attempt to enter a foreign market where it has no relevant network position, it will suffer from the liability of outsidership and foreignness, and foreignness presumably complicates the process of becoming an insider” (Johanson & Vahlne, 2009). Johanson and Vahlne (2009) recognize the similarities between entrepreneurship and internationalization however they state that “...while Sarasvathy views the actors and their characteristics as important, our model does not include this point at all. We do argue, however, that the actors are implicitly present in our model to the extent that they are the carriers of (tacit) knowledge, trust, commitment, and network relations”. This is neglecting the importance of the carrier of knowledge and their characteristics since humans can also leave the organization, thus it can affect the availability of the knowledge, networks and trust in the organization.

8.3   Innovation Models Innovation relation models treat the process of internationalization as innovation for the firm (Bilkey & Tesar, 1977; Cavusgil, 1980; Reid, 1981). According to Gankema et al. (2000), these studies are grounded on concept that products have life cycles, which was introduced by Vernon (1966). In relation to the cycles or stages of a product, these studies recognized the existence of various stages in the internationalization process for SMEs. Although there is a disagreement in current literature over the amount of stages that are recognized, Gankema et al. (2000) summarized the identified stages as follows.

7

The initial stage of the internationalization process according to the innovation models is when a firm solely focuses its efforts on the domestic market with little or no interest in exporting activities. In the second stage, the firm examines the options and searches for information, meaning the internationalization process has not yet begun but the idea for it is present in the firm. As information has been gathered and exporting on a small scale begun the firm enters the third stage of the internationalization process. The third stage shift to the fourth only when there is a “…systematic effort to increase sales through export to multiple countries” (Gankema et al., 2000). If firms start depending on these foreign markets they enter the final stage of internationalization. As previously mentioned, however, no consensus over how many stages there are has been reached. In a study on Canadian software SMEs, Reuber and Fischer (1997) observed that experience and knowledge was an important part in the internationalization process. If the management team had a significant amount of experience and knowledge regarding the internationalization process of SMEs, as one might obtain from having gone through the process before, the SMEs essentially skipped the first two stages of the internationalization process. This because the idea of internationalization is brought into the company, or already exists in the company by a manager with knowledge and experience. Regarding the search for information relevant to the process, identified as stage two, it was not needed if the management team has sufficient proficiency and understanding (Gankema et al., 2000). One criticism of Innovation models, identified by McDougall, Shane and Oviatt (1994) is that the existing models fail to describe the internationalization process of SMEs that are internationally oriented from the startup. In their study, titled “Explaining the formation of international new ventures: The limits of theories from international business research”, McDougall, Shane and Oviatt (1994) discuss the phenomenon of International New Ventures (INVs) stating that they represent a growing amount of SMEs and that existing models fail to explain their behavior.

8.4   Network Approaches Criticisms of the Uppsala model (Reid, 1983; Nordström, 1990) was taking into account in the first revision of the model by the authors, leading to a new perspective where networks were taken into consideration. As previously discussed, in their first revision of the Uppsala model, Johanson and Vahlne (1990) argued the importance of networks as a part of the gradual increase in knowledge. They also introduced the concept of outsider and insider which was elaborated on in their latest revision (2009) when they discussed the liability of outsidership. The Uppsala model is primarily labeled as one of the two primary stage-models, despite innovation models treating the internationalization process as stages as well, yet it is one of the models that contributed to the surge in network approaches to internationalization. Johanson and Mattson (1993) correspondingly argue the importance of networks with regards to the gradual learning process. In their study they view the firms position in their respective network from both a macro (firm-to-network) and micro (firm-to-firm) perspective (Ruzzier et al., 2006). Similar to the Uppsala model, Johanson and Mattson (1993) view the internationalization process as taking place over stages. They identify four stages: 1) the early starter, 2) the late starter, 3) the lonely international and 4) the

8

international among others. Their view is that firms start by developing their position in domestically-oriented networks. As they expand beyond the border of the host market, the firm gradually engages in foreign market networks. In a study on the collaboration between firms in international business relationship, Holm et al. (1996) argues that cooperation between firms in international business relationship can increase the significance, or “value”, of that relationship. Holm et al. (1996) also states that the “…business network connections have an impact on cooperation”. The study analyzed 136 international business relationships and their conclusion was that the value gained by both firms in the relationship is directly correlated to the level of commitment to the relationship i.e. firms that commit to their international business relationships experience a higher level of relationship profitability (Holm et al., 1996). In the study titled “The role of social and human capital among nascent entrepreneurs” Davidsson and Honig (2003) analyze the role of social and human capital. According to the authors, education and previous entrepreneurial experience did not contribute to first sales and profitability, which were the main criteria for success in their study. This directly disputes the findings of Gankema et al. (2000) who stressed the importance of previous entrepreneurial experience in a new firm, although the focus of that study were in the alignment with the innovation models. Davidsson and Honig (2003) do argue the impact of social capital as determining criteria for success. Social capital, according to the authors, include, but are not limited to, the role of friends, social networks, acquaintances who own businesses, parents whom had managed businesses and factors such as support from the family. They also argue that governmental programs and support activities are currently proficient in aiding the bureaucratic process for entrepreneurs but should place more focus in aiding the the process of managing network activities, and that “entrepreneurs would be well advised to develop and promote networks of all sorts, particularly interfirm and intrafirm relations” (Davisson & Honig, 2003). In alignment with the role of interfirm relationships, Andersen and Buvik (2002) recognize the importance of current studies on cross-border transactions, i.e. internationalization, but argue that “…relatively few researchers have focused on the process by which firms select where or with whom the transactions should be performed”. In their study on International Market Selection (IMS), the authors discuss how there seems to be a shift from traditional IMS methods, which are more intrafirm based, to focusing on interfirm relationships and networks. They acknowledge the fact that further studies would be needed on the subject and that there are situations where a relationship approach is more appropriate than in comparison to other situations (Andersen & Buvik, 2002).

8.5   Resource-Based Views Resources-based views are not exclusively focused on internationalization, but can and are applied to internationalization of SMEs in current research. The evolving field of study can be summarized as a perspective where a firm’s distinctive resources and its

9

ability to both obtain and retain these resources affect its ability to enjoy competitive advantages in competitive marketplaces (Ruzzier et al., 2006). In an article comparing the newly emerging RBV with more traditional models, Conner (1991) state that “…a resource-based approach to strategic management focuses on costly-to-copy attributes of the firm’s sources of economic rents and, therefore, as the fundamental drivers of performance and competitive advantages”. Costly-to-copy essentially translates to a firm’s ability to maintain distinctiveness i.e. the resources controlled by the firm are unique and not expensive to duplicate, both in terms of time and financial resources., to duplicate. In the study “Firm Resources and Sustained Competitive Advantages”, Barney (1991) discusses the connection between competitive advantage and resources controlled by firms. Barney argues that resources controlled by a firm must include the following four qualities; valuable, rareness, imperfectly imitable and it cannot be easily substituted. If attributes of the firm do not include the above mentioned qualities then according to Barney (1991), they cannot be viewed as resources for the firm. As the study focused on the connection between competitive advantages and resources controlled by the firm, the author argues that if resources are not rare i.e. they are obtained by other firms too, nor valuable i.e. they do not contribute to improve the firm’s efficiency then they cannot be regarded as resources as they do not contribute to gaining a competitive advantage. Equally, if the firm’s resources are perfectly imitable and easily substituted then they cannot be perceived as resources for the firm (Barney, 1991). With regards to Barney (1991), Grant (1991) demonstration a different perspective on what should be regarded as resources. According to Grant (1991), in order for a firm to enjoy competitive advantages, its resources must be durable, the process by which a successful firm enjoys a competitive advantage cannot be easily transparent, if the process is transparent then the easier the transferability of these resources the shorter the competitive advantage will last, and lastly the firms resources should not easily be replicable. Grant (1991) include similar perspectives to Barney (1991) of what constitutes a resource and what a resource cannot be in order to enjoy competitive advantages but go into more depth of how transparency, transferability and replicability can take away competitive advantages for a firm. Grant (1991) also discusses several aspects of durability which both include capital goods, which the authors argues technological advancements are reducing the value of this resource, and resources such as brand image and historical perception of the company, which can be highly valuable resources. Comparing the two perspectives, Ruzzier et al. (2006) state that “…resources in general can be considered stocks of available tangible or intangible factors that are owned or controlled by the firm and converted into products or services, using a variety of other resources and bonding mechanisms”. Commenting on the work of Ahokangas (1998), Ruzzier et al. (2006) state that recent developments RBV and network perspectives are overlapping. Ahokangas (1998) discuss resources from a interfirm, intrafirm and network standpoint. Ruzzier et al. (2006) summarizes and elaborates on this stating that there are four “hypothetical modes of resource adjustments”. These are 1) internal resources in a firm oriented mode, 2)

10

external resources in a firm oriented mode, 3) internal resources in a network oriented mode and lastly 4) external resources in a network oriented mode (Ruzzier et al., 2006).

8.6   International Entrepreneur Perspectives According to Ruzzier et al. (2006) both the economic and the process perspectives of internationalization of SMEs ignores the fact that behind these companies, there are individuals making strategic decisions. Miesenbock (1988), referenced in the article by Ruzzier et al. (2006), stresses the importance of the entrepreneur and claims that it is the key element when expanding a firm beyond the borders of its domestic market. In other words, the economic and process perspectives fail to emphasize the significant function entrepreneurs play in the internationalization of SMEs. McDougall and Oviatt (2000) highlight the emerging fields of international business research and studies focusing on entrepreneurs. The authors claim that the topic “is still without a unifying and clear theoretical and methodological direction” and that further research will most effectively be developed by merging experience with expertise calling for the fusion of academics and professionals to be in the forefront of this recent area of exploration (McDougall & Oviatt, 2000). The article is a holistic view of the emerging perspective. McDougall and Oviatt (2000) make references to previous studies embracing the importance of the entrepreneur in the international landscape presenting present and developing arguments such as 1) the earlier a firm internationalizes, the faster the firm will be able to familiarize itself with international marketplaces thus leading to faster international growth (Autio et al., 2000), 2) technological learning advantage can be gained by operating in diverse markets and by effectively integrating gained knowledge into the firm (Zahra et al., 2000), and 3) scarce resources can be leveraged by forming technological coalitions between organizations (Steensma et al., 2000). Alvarez and Busenitz, (2001) discuss the overlapping relationship between RBV perspectives and the field of research focusing on entrepreneurship. The authors recognize so called “individual-specific” resources that aid the process of both gathering, developing and using resources as well as identifying strategic opportunities for the firm. Alvarez and Busenitz (2001) expand on this, commenting in their conclusion on both their own contribution and significant contributions of others, by stating that “…a result of taking an entrepreneurial perspective, one contribution to RBV is that we are now able to identify resources such as entrepreneurial alertness, insight, entrepreneurial knowledge, and the ability to coordinate resources, as resources in their own right”.

8.7   Conceptual Model of Internationalization This section comments on an existing conceptual model that serve as a tool in the qualitative data extraction formation process i.e. the interview design for this study. In the article “Intrapreneurship Modeling in Transition Economies: A Comparison of Slovenia and the United States”, the authors Antoncic and Hisrich (2000) develop an integrative conceptual model merging the international entrepreneur perspective on

11

internationalization with traditional and established models. The study focuses on the concept of intrapreneurship, defined in their research as “…entrepreneurship within an existing organization” (Antoncic & Hisrich, 2000). Comparing firms in Slovenia with the United States they found that the intrapreneurship is an important challenge to overcome and opportunity to cease in order to experience improved performance and that there were only slightly less recurring signs of intrapreneurship in the Slovenian organizations. The model aims to show how environmental and organizational factors are drivers of intrapreneurship which in turn is a driver of growth and profitability. In a revision of the model, Ruzzier et al. (2006) develops the conceptual model further. The revised model divides organizational factors into firm characteristics, such as number of employees and sales, and entrepreneurship, such as international business skills and international orientation. For this study, the contribution of the research by Antoncic and Hisrich (2000) is less on the comparison between the countries and more on the development of the conceptual model. The model integrates traditional models with the entrepreneurship perspective which is of high importance for this research (Ruzzier et al., 2006). The problem is its lack of credibility as it has only been tested few times (Tan, 2008). The significance is therefore the integrated nature of the model serving as a guideline for the interview design which in turn will make sure that the data collected parallels with the various perspectives on SME internationalization, in order for an integrative model to be developed.

9   Methodology

The following section describes the research philosophy and the chosen methods of reasoning adopted for this study. An exploratory research is often used for building ground for future descriptive and causal research. Further an exploratory research aims to build the foundations for future descriptive and causal research that in turn aims to prove or disprove hypothesis (Malholtra & Birks, 2007). Furthermore, the advantages of exploratory research are its flexibility, and its ability to garner insights without quantitative measurement. Hence the most relevant and feasible type of research is an exploratory research, to not only look at the subject but also explore ways to use the theory chosen. Currently two main scientific ideologies direct the course of modern research, interpretivism and positivism (Ritchie & Lewis, 2003). Positivism derives from the area of natural sciences, where it is common to have one truth. One “law of physics” for each event, that garners and defines the concerned phenomenon. In positivism and natural sciences these laws are meant to predict futures perfectly and experiments should be reproducible universally ie. a dropped apple and a dropped pencil will hit the ground at the same time, anywhere, anytime on earth. Interpretivism, as the name suggests, the information is interpreted always in relation to the context it is in, in fact no context free theory exists in the philosophy of interpretivism (Ritchie & Lewis, 2003). Interpretivism does not recognize universal

12

laws and everything can change in the context and therefore it aims to understand the research subject itself in the best possible way (Schwandt, 2000). In other words, interpretivism emphasizes emotions and values and continuously develops theory from the collection of data (McLaughlin, 2007). For the aforementioned reasons interpretivist philosophy is more attuned to the goal of this research which is to understand the behavior and perhaps coincidental and contextual patterns in the internationalization of Nordic lifestyle brands which, as the purpose of this research states, will aid in the formation of an integrated model. Inductive and Deductive reasoning are common methods of reasoning in current research (Saunders et al., 2009). Deductive reasoning aims to take existing facts and uses those facts combined with other facts and data, to produce other facts. Hence deductive reasoning is more common in natural sciences, as a consequence of the research philosophy of positivism. Inductive reasoning on the other hand looks at a multiple set of events, in other words: trends, and predicts the most probable future outcome or behavior as a consequence to those trends. As a result, inductive reasoning does not result in doubtless predictions, however it can be beneficial in terms of giving options for outcomes. A third method of reasoning is abductive reasoning. It could be considered the most fallible of the group as it attempts to guess the most likely explanation in a case with often very incomplete set of events (Stanford encyclopedia of philosophy, 2011). Due to the nature of uncertainties in human social behavior, as well as the qualitative and exploratory nature of this study, inductive and abductive reasoning are the most appropriate methods to use in this study. Inductive where it is possible to have multiple set of past events to use for prediction, and abductive where more assumptions have to be made. Qualitative research is the most fitting approach in the case of an unknown research area, because it does not require hypothesizes (Malhotra & Birks, 2007; Dworkin, 2012). The qualitative method is additionally related to both Interpretivism and inductive approach (Bryman & Bell, 2003). On a more practical note, a qualitative approach allows for the exploration of underlying reasons to business decisions more in depth by asking follow up questions in interviews and making connections that would be impossible with a quantitative approach. Additionally, in qualitative research an equally large sample is not needed which makes it easier to control in relation to the scope of this research. To summarize, the study is an exploratory research into the area of SME Internationalization research with and aim to devise an integrative and inclusive model of internationalization. The Qualitative method of in-depth interviews is chosen to extract as much information about the subjects Interpretivism was chosen as a research philosophy because of the nature of behavioral uncertainties and value differences in human social activities. Inductive reasoning because of related reasons of assessing behavioral trends where a future or fact can not be predicted with unmistakable certainty from other facts.

13

10   Method

The following section takes a look at how the authors conducted the study and the primary aspects involved in the qualitative data collection as well as the approach to analyzing the data gathered.

10.1   Research Approach As the purpose of this thesis is to integrate SME internationalization models and, in the context of Nordic lifestyle brands, reflect on their internationalization process, both an inductive and an abductive research approach was adopted. As an inductive approach aims not to fit data into a model, this approach is applicable to the research questions of this study to be able to conduct the thematic analysis independent of SME internationalization models. When data is less explicit, an abductive approach is taken to interpret what the entrepreneurs are saying, in context.

10.2   Primary Data The function of primary data is that it directly corresponds to the formulated purpose of a study and aim at answering the research problems stated (Malholtra & Birks, 2007). The primary data collection in this study serve the purpose in two ways. First and foremost, the data collected in the form of interviews, will serve as the integral component in order for a thematic analysis to be conducted, from which an integrated model of SME internationalization can be formed. Moreover, as the study takes on the context of Nordic lifestyle brands, the data collected will also contribute to an understanding of the internationalization of Nordic lifestyle brands. The interviews in this study are in-depth and semi-structured. The reason as to why semi-structured interviews were chosen in contrast to a structured form of data collection is because semi-structured interviews allow for deviation from the arrangement of questions to permit further inquiries to gain a deeper level of understanding. As the aim is to create an integrated model and to study the internationalization process of Nordic lifestyle brands, via a thematic analysis process, a rigorously structured interview may not generate enough data to analyze recurring themes.

10.3   Reliability of Qualitative Data Due to the anecdotal nature of qualitative research, reliability and trustworthiness is a frequent topic of discussion in current literature (Shenton, 2004). Lincoln and Guba (1985) have identified four criteria for qualitative research trustworthiness: credibility, transferability, dependability, and conformability. To address credibility, questions are projected from different perspectives to achieve holistic results (Long & Johnson, 2000; Shenton, 2004). Additionally, interviewees were exposed to live analysis of the interviewer and asked to correct if faulty abductive reasoning was conducted. For transferability, a challenge for qualitative research, which means the generalizability of the results, a detailed description of how the studies are made is provided to facilitate transfers (Lincoln & Guba, 1985). With dependability

14

Lincoln and Guba (1985) refer to consistency and repeatability of the results which is addressed with the same measures as Transferability. Conformability, the last criteria assesses the researches neutrality. To minimize bias in the outcome, own views should be succumbed and a strong focus put on the interviewers reflectivity (Lincoln & Guba, 1985; Shenton, 2004).

10.4   Selection of Participants The initial procedure was to generate a large pool of companies in the various Nordic countries that fit into the previously specified definition of lifestyle brands which was both to associate their choice of brands with their personal and social identity and to project “an individualized image of a desired lifestyle” (Catalin and Andreea, 2014). As the selection of companies is limited by the subjective categorization of what companies the authors would argue fit into the definition of lifestyle brands, this limitation was abridged when conducting the interviews through asking if the companies themselves if they consider themselves to fall into the category of lifestyle brand. Succeeding the creation of a long list of firms, the following procedure was to initiate contact with the firms listed. The companies contacted that responded primarily displayed a positive attitude about the research project but as expected many of the firms declined to to time constraints. Creating a larger than necessary list of companies to contact proved effective as the majority of firms either declined or did not to respond. In total four firms were positive to contributing to the research and had time for interviews to be conducted. In relation to the individuals selected for interviews, Purposive sampling is used. Purposive sampling is typically used when the participation in the interview demands certain skills or knowledge, in this case company organization, history and high anecdotal knowledge (Singh & Singh Mangat, 1996). Adhering to purposive sampling, during the contact phase of the study, it was made clear to the companies that as the nature of the study involves internationalization of SMEs, it is paramount that the individuals selected for the interviews have a broad knowledge of the company, particularly in its internationalization endeavors. The selected companies were consulted on this matter and asked, who they considered to have a broad knowledge of the company. The issue of what is a sufficient number of participants was determined throughout the interviews the point a sufficient amount of interviews have been conducted can be experienced when additional data collection is not giving significant new insights (Dworkin, 2012). The number of interviews is also restricted by the scope of the thesis.

10.5   Interview Design As stated in the frame of reference, the integrative nature of conceptual model proposed by Antoncic and Hisrich (2006) was used to design and structure the interviews. As the model integrates traditional models with the international entrepreneurship perspective it was selected as a good reference model to break down the components of the model and formulate questions that would extract answers from the companies regarding the various elements included in the model.

15

The model did not provide a structure appropriate enough to be translated into questions but it served the purpose of a holistic overview. Areas where the model was non-explanatory and allowed for interpretation, such as under the section “Social Capital”, current literature presented in the frame of reference served as a tool for formulating questions (Ruzzier et al., 2006). The design of the interviews can be seen in Appendix 1: In-Depth Interview Design.

10.6   In-Depth Interviews As the objective of this study is to collect detailed, accurate as well as anecdotal material regarding our topic in-depth interviews were chosen as the most suitable option. According to (Malhotra and Birks, 2007) in depth interviews are personal and direct interviews and provides insightful knowledge from individuals on a topic (Hesse-Biber & Leavy, 2011; Chirban, 1996). The interviews were conducted via a VoIP service such as Skype in this study which also allowed for video transmission as well as audio transmission. As the Nordic lifestyle brands were dispersed over a relatively large geographical area, the use of such services allowed for next-best-alternative as face-to-face interviews are not only timely but costly as well. Crucial for the thematic analysis is the recording of these interviews which were done via screen-audio-recording services such as QuickTime. Additional mobile recording devices were also used to circumvent any potential recording errors.

10.7   Thematic Analysis Following the conduction of the interviews, the interviews were transcribed from the audio recordings. The purpose of this is to allow for a thematic analysis to be conducted from the primary data gathered. As the interviews were conducted in Finnish and Swedish and the transcripts are a translation of these interviews, a margin of error have to be taken into consideration as subjective translations can influence the final version of the transcripts. For this study, this margin or error was acceptable as the gist of the answers given by the companies have more value every word those answers. A thematic analysis consists of several phases (Analytictech, 2016). The initial phase is for the authors to familiarize themselves with the data collected. This involves reading and discussing the material between the authors. This allows for a deep level of understanding of the data. The second phase is to highlight important sections i.e. paragraphs, sentences or words in the transcripts. The highlighted sections were analyzed and pooled into categories of themes with similar characteristics and these themes were reflected onto existing literature to see if they were already represented and an appropriate name was chosen either inspired by existing research or invented in relation to the characteristics of the theme. Whenever a recurring theme emerged, a coding rule was developed to help identify the highlights as belonging to the particular theme. An inter-reliability rater approach (Upton & Cook, 2014) was applied to the thematic analysis in this study where the authors individually extracted information and made the

16

initial thematic categorizations. To limit the dismissal of important parts of the transcripts, this approach allowed the authors to provide a subjective analysis of the interviews before discussing their findings with each other.

10.8   Data Analysis The purpose of the analysis is to connect current perspectives and theories to the empirical data in order to create and validate the elements of the integrative model. The themes identified in the thematic analysis were pooled together with other related themes, into what would later become the elements of the integrative models. These elements were validated and reflected into existing theory, to not only identify the most relevant theories for each element but also identify gaps, limitations and shortcomings. The result is an integrative model that combines the strengths of the theoretical models discussed in the Frame of Reference, and addresses many weaknesses. The aim is that this model would be a more inclusive model that stems from the interviewed entrepreneurs’ perspective. The analysis also discusses the relation of each theme to the other themes, which gives us a model that understands the relationships between the different factors. To summarize, the analysis is structured as follows. From the thematic analysis, the themes identified are further categorized into elements of similar themes. The relation between the themes and why they are grouped are then described, related to existing theory to validate and reflect upon the themes characteristics. The limitations of the existing literature is discussed finally comments on the emphasis the entrepreneurs placed on the themes and elements in the interviews are made.

11   Empirical Findings

The following section will present the empirical findings of the study. The themes and their corresponding definition and coding rule will be presenting. After, the findings of each interview will be presented.

11.1   Identified Themes Eleven themes were identified in the interviews. The themes are recurring topics or issues that the entrepreneurs stressed, put emphasis on and felt were important. The identification of these followed the thematic analysis where first the interviews were transcribed from audio recordings that were between 47 to 90 minutes in length. Key words and sentences from the transcribed interviews were then highlighted and from that the initial coded initially interview at a timing was formed. Citations were then grouped from each interview and themes were labeled, reviewed and then finalized. Below are the themes, abbreviated by the letter T following a number ranging from 1-11, the definitions, which are brief explanations of each theme and lastly the coding rules that distinguish the themes from each other. Following the presentation of the themes, the interviews are presented, each interview is abbreviated with the letter B, followed by a number ranging from 1-4 in chronological order of when the interviews were conducted. There are instances where the authors have chosen to not write about a certain theme (T) for a specific interview (B). The reason for this is because certain

17

themes were only identified in some interviews while others put little to no emphasis on it. Table 1: Thematic Analysis

Themes Definition Coding Rules

T1: Starting Up Origins of the brand. Interviewees need to make reference to the origins

of the company and/or factors that initiated the idea behind it.

T2: Aspirations and Culture

Entrepreneurial drive and mindset and organizational culture of the team behind the brand.

Interviewees need to make reference to the aspirations, core philosophy of the company and/or some element of the entrepreneurial mindset in the firm.

T3: Human Capital Qualities, skills and backgrounds of the founders and team.

Interviewees need to make references to the qualities, skill set, and professional background within the firm.

T4: Product The products of the company. Interviewees need to make references to the

development of, the qualities and the appeal of or any factors relating to the product.

T5: Branding Strategy

Strategy of the company to manage its brand

Interviewees need to make reference to elements that contribute to their branding strategy, brand or marketing communications of the company.

T6: Opportunity and Knowledge Creation

Direct or indirect actions leading to the creation of an opportunity

Interviewees need to mention factors relating to active or informal efforts to discover opportunities or seek knowledge related to internationalization.

T7: Network Management

Management of professional relationships

Interviewees need to make reference to actions that relates to acquiring, developing, maintaining, evaluating and/or discarding business relationships.

T8: Network Engagement

Engagement of nodes inside a network

Interviewees need to make reference to business relationships considered particularly important for the internationalization of the company to a specific market or in general.

T9: Support Networks

Supporting activities from external sources which adds value to the focal firm

Interviewees need to make reference to an informal relationship that has been helpful in the internationalization of the company.

T10: Institutional Support

The impact of institutes aiding the focal firms

Interviewees need to make reference to the use of institutional support including consultation, grants and subsidies etc.

T11: Awareness of Limitations and Capabilities

The awareness of limitations and capabilities.

Interviewees need to make references to their own challenges, limitations or other factors and/or how does that affect their decision-making.

18

11.2   Kyrö Distillery Company (B1) Kyrö Distillery Company, founded in 2014, is a Finnish spirits company based in the town of Isokyrö. The company focuses on making making single malt whiskey from malted rye and rye-based gin with local botanical spices. In 2015, Kyrö Distilleries Napue Gin won the prize for the best Gin & Tonic in the UK 2015 Wine & Spirits competition (Good News from Finland, 2015) and in 2016 Kyrö Distilleries Juuri, a single malt rye new make won gold in the whisky category at International Spirit Awards (Good News from Finland, 2016), whom had 150 different gins participating from around the world. Although Kyrö Distillery is a relatively new company, their products are already sold in 16 different markets around the world, with the biggest international markets being Japan, Belgium, Germany and the UK. However, the biggest international efforts are still in the future, for now international sales account for about 20 % of Kyrö’s revenue. The interview was conducted with Miikka Koskinen. Starting up (T1)

“We were drinking rye whiskey during a Sauna evening and were wondering why anyone is not making Rye Whiskey in Finland.”

The way Kyrö Distillery Company was founded was certainly a very Finnish way. Important context to the birth of the company is the importance of the sauna culture to the Finnish society, as well as Rye as a traditional ingredient in the Finnish food culture. During the sauna evening of Kyrö starting, the founders acted rapidly on the idea. Miikka, the up and coming CEO and already a Whiskey connoisseur, sent the first emails that very night to some contacts he had made in the industry, asking for advice on where to start. The company was incorporated within two months of that evening, within half a year they had the founding team assembled and in 9 months the company had gained their official license to start distilling. Aspirations and Culture (T2) Kyrö Distillery Company aims to be the largest and most well know rye whiskey Distillery by 2020. While rye distilleries are a rarity according to Mikko Koskinen, the Brand Manager at Kyrö Distillery, he describes the goal as an “inspirational one rather than a measurable one”. For Kyrö Distillery Company, an aspiration is to introduce a wider audience to rye whiskey and raise awareness of rye distilling in general. The company started by the friends, believes that what has contributed to the entrepreneurial “drive” of the company is the “strength of the idea” and a strong will to achieve and build something. The production of whiskey at Kyrö Distillery initiated by practicing distilling using laboratory equipment as well as using existing facilities of other spirits companies to test recipes in Finland. Soon after starting distilling whiskey the company came up with the idea for a rye based gin to drive the brand and support the business while distilling whiskey. The company's success in the Finnish domestic market, as well as in competitions abroad has given them courage to internationalize and aim higher.

19

Human Capital (T3) Out of the four founding partners at Kyrö Distillery Company, three have prior management and/or entrepreneurship experience and two have either formal or informal experience with brewery or spirits. Everybody in the company has either worked or been on exchange from abroad, Jouni and Mikko from some of their main international Markets like the UK and Germany, however the team does not have personal international experience from their other big markets; Belgium and Japan. Miika the CEO of the company has worked in change management consultancy in the pharmaceutical industry. Mikko the Brand and Marketing Manager, is a Civil Engineer by education but has worked as CEO in two start-ups. Kalle, the distiller has entrepreneurial experience from the brewery industry as well as research experience from the chemistry industry. Jouni, head of international sales, started a logistics company to China when he was 26. Product & Branding strategy (T4 & T5) According to Mikko Koskinen, the whole picture is extremely important. What Kyrö stresses is that when all the essential components are there, the rest becomes much easier. The two key ingredient for Kyrö, according to the interview, are their product and the brand. “If you want to succeed, every part has to be perfect, the product has to be super good, the story of the brand has to be good, and the founders have to be likeable people. And

of course in this industry the brand is very important, and in a way a part of the product itself”

With regards to strategies, Kyrö Distillery does not currently have industry specific international marketing strategies. The company concentrates on having a general brand strategy and position their product to the high-end by having a strategic goal to get Kyrö Distilleries Gin sold in at least four out of the top ten cocktail bars of every new market they enter. "Personal relations are important but the story and the product are definitely extremely important. If you can also communicate your product so that when you are presenting it

to a potential distributor they will instantly feel like there is something here and that they want to be a part of it. Very few brands can do it and if you can achieve that, then it makes all the other work much easier. The better you take care of the specific aspects such as personal relationships, the story and the product the easier internationalization

will be as a whole." Emphasis was also placed on being a great partner to work with, according to Mikko Koskinen it has to do with “whatever is understood as general professional” as well as making sure personal relationships with the clients are taken care of. This also means to become known for being a committed and trustworthy brand to work with. In this context, Kyrö Distillery is putting a lot of focus on building a strong and positive brand reputation towards the distributors.

20

Opportunity and Knowledge Creation (T6) The element of serendipity was highly present in the manner in which Kyrö Distillery entered the Japanese market. Miikka, the CEO of the organization, stumbled upon a cocktail bar during a holiday ski trip in Nisoko, Japan. After engaging in conversations with the personnel and bartenders of the cocktail bar, Miikka had convinced them to visit Kyrö Distillery on their upcoming trip to Europe. Impressed with Kyrö Distilleries new facilities in an old cheese factory, and placed first orders. Presence in the “right” tradeshows, is emphasized as important. However, going to the various locations, finding out which bars are regarded as the high-end then engaging in a conversation with them to gain knowledge on how to get the products in their locations is considered the most important the strategy for Kyrö. This was, both important in the creation of personal relationships, which are seen as important in the industry, as well as gaining information about the relevant distributors and networks in the market. According to Mikko Koskinen some of the most valuable networks often get created outside of the “business hours”, being active, attending events and putting yourself out there often leads to those lucky encounters. Network Engagement (T8) Significant emphasis was put on working with the “right kind of people” with regards to both external business relationships and interfirm personnel. The goal of Kyrö is to find partners who are both driven to grow their own business as well as committed and capable to represent Kyrö’s brand. There are several factors that Kyrö Distillery has found to contribute to this. As previously mentioned, the product and the brand are extremely important for creating a base on which the focal firm as well as the partners can grow their business. Another imperative factor is to take care of the relationships and to manage them. Educating the networks about your company, brand and products, is seen as especially important. This way the focal company can also express commitment and create commitment and trust with their partners. Kyrö Distillery Company also created an advisory board that is comprised of individuals with expertise in both business domestically and abroad as well as academia. In addition to being a valuable source of experience and expertise, the advisory board also has access to networks in various international markets and according to Koskinen, will have a role in expanding to future markets. Many of the members of this board contacted Kyrö Distillery Company, showing a high interest towards the brand and demonstrating the potential of a great brand to attract talent, knowledge and opportunities. Network Management (T7) Kyrö visits its main markets frequently and keep close personal relationships to the key partners there. The role of the brand manager, in addition to being responsible of the marketing and brand strategy and communications, is to “activate contacts” internationally, according to PERSON. Existing relationships are strengthened as well as encouraged to get more involved with the focal company. Another aspect that has been important for the focal company is to evaluate the business relationships early on to understand if it is functioning in the intended way. An example of this was that Kyrö realized early on that one of their distributors was too big for them

21

and did not have the opportunity of presenting the brand in the way they wanted. They decided to switch to a smaller distributor in Germany to tackle this issue, who can focus more on their brand. Press visibility also often happens through contacts who know certain journalists, according to Miikka. Maintaining close contacts with your networks and partners is imperative because that can develop into a relationship where both help each other regardless of their own advantage over it. Support Network (T9) The focal company uses support networks to gain access to knowledge about foreign markets, opportunities and valuable business contacts. These support networks are often other companies, entrepreneurs, who are located close to the company and often informally meet and exchange information. Kyrö Distillery, often attend the same tradeshows with other companies from their support networks and share knowledge about them. Exchanging information is very open and informal, and in Kyrö Distilleries case it has contributed to finding several distributors. The Support networks also sometimes collaborate on foreign PR efforts, which was the case of participating in a program called “Food from Finland” where they collaborated on the PR efforts. Institutional Support (T10) Some Finnish governmental organizations provide support that is directed towards internationalization of companies. The general perception of Kyrö was that the monetary assistance for internationalization is welcome since it often can make you do the trips where you would not normally go. However other types of support where the organizations try to arrange meetings and so on for the companies, have not generally yielded much results for the focal company.

11.3   Sneaky Steve (B2) Sneaky Steve is a Gothenburg based company founded in 2007. The company aims to appeal to the “urban-denim culture of the wet and misty Gothenburg environment” and the idea was to challenge the traditional footwear industry (Sneaky Steve, 2016). Sneaky Steve produces both sneakers and leather boots and with rising demand from early stages, they currently export to a large number of countries around the globe, primarily focused in Europe. The interview was conducted with Kristian Torsson. Aspirations and Culture (T2) Sneaky Steve is a firm with four managers, each with a clear role and the tasks that that role entails. During the startup phase it was essential that they divided up the roles in the organization as to focus on what each one does best. Sneaky Steve emphasized on getting a strong foothold in the domestic market prior to expanding internationally. Upon observations of strategies of other brands, the perception was that if you do not have a grip of the domestic market then you would potentially be left vulnerable if distributors, which is main exporting mode of Sneaky Steve, did not place any orders.

22

“Our philosophy has always been that we need to be strong in the domestic market before going abroad.”

Learning by doing is an addition to that core philosophy as well as having effective and transparent means of communication. Sneaky Steve emphasized the importance of effective and transparent communications. During board meetings they strategize future endeavours and learning by doing continuously adds to the know-how of the company. Transparent means of communications in the company also means allowing shortcomings within these clear division of tasks as they know they all practice with passion. Shortcomings are thus perceived as lessons learned within the organization.

“... Not to be afraid of not having found anything good for the next board meeting because if we don’t find something we like we won’t go into that market.”

Human Capital (T3) Within the company, there was only one of the four managers that had prior international experience. The addition of the manager with the international experience, proved important as this person had been involved in startup companies before and had networks to distributors in the global marketplace. This individual, despite having a passive role in the day to day operations, contributed with knowledge and will in the future play an even greater role in the organization. “We don’t really have that international experience. We do have this one guy. Mattias,

whom went in as a partner right after me. He has done this journey before. He has worked a lot with distributors and a lot of fashion companies”

In essence, Sneaky Steve is a company with enthusiasm and passion at its core and does not have sales as a primary objective. Keywords like ‘fun’, ‘love’ and ‘passion’ were frequent in the interview.

“We are good at what we do and we love what we do.”

Product (T4) and Branding Strategy (T5) The alignment of the branding of Sneaky Steve products in the different markets was described as important and something the company will place more focus and resources on in the coming future. When potential or existing consumers visit any of the social media platforms Sneaky Steve have chosen to use, their needs to be a common thread between how the distributor displays and works with the products, and with how Sneaky Steve directly communicated with a global audience via social media platforms. “We want there to be a common thread. Some countries have run their own thing and it

doesn’t really go along with our core idea” Distribution is the main mode of entry into the markets the company operates in. Despite being described as a method which is difficult; time consuming and costly, it reduced the responsibility of the company to sell in those markets, according to Kristian. In key markets where they do not have a distributor, Sneaky Steve directly communicates with stores they want to work with.

23

Another part of their branding strategy is to package the whole experience around the shoe. From the interview it was obvious that strategies like that is what makes them a true lifestyle brand. Their boxes feature in-house designed tattoo-like shapes and figures, very much aligned with the urban, misty Gothenburg environment image they want to portray. Even the paper inside the shoes were of mackerel and coming features to the shoe boxes will include a the story of the company, all to package the whole experience.

“We have been getting a lot of positive response not only because we make shoes but also because we try to package the whole experience”

Opportunity and Knowledge Creation (T6) Sneaky Steve display their products at trade fairs and exhibitions both in domestic and international markets. Presence in these events allow for opportunities to arise and experience to be gained which translates into knowledge for the company. In the domestic market traditional approaches such as trade fairs were used and although it seemed like trade fairs abroad were mostly initiated by their distributors, Sneaky Steve chooses to reduce the costs of displaying at events by inviting customers to a hotel where they can, in a more informal manner, present their collections. This is a noteworthy mention but is labeled under category T7. Network Management (T7) Kristian stressed the importance that their networks play in the internationalization process of Sneaky Steve. As their main method of exporting to international markets was via distribution, key factors that Kristian brought up to ensure that the relationship is managed is to allocate time to the distributors. Not only via emails and phone calls but physical presence plays a significant role. In addition, the factors regarding both the management of nodes inside the network and the acquisition of new distributors and business relationships via nodes inside the network were discussed. Kristian put emphasis on the fact that newest countries that they enter are via connections. “Networks have helped us a lot. I have started up most countries through connections.” Kristian also mentioned that managing relationships also include discarding business relationship that prove unsuccessful either on a personal level, such as not being able to work together, and/or a failure to meet goals set up by both parties. In relation to category T6, which stated that Sneaky Steve actively work on finding ways to display their products in international markets such as displaying at a hotel in Germany. This method is very much related to Network Management as they try to not only appeal to the business interests but the personal interests of the people in their network they have gotten to know. “We meet our distributors and bigger customers like Zalando and Wormland and they come up to us and hang out with us in the hotel. Listen to some good music and chill on

the couch. It really creates a different environment instead of loud music at a fair.”

24

Institutional Support (T10) Sneaky Steve have not found that governmental programs or activities have aided their internationalization process. A brief mention was made of seeking advice regarding exporting to the UK but the general perception of the company was that their networks are the most efficient way of entering new markets. Awareness of Limitations Capabilities (T11) The main challenges for the company were the number of competitors and the home-brands of large stores. The German market was discussed as a highly saturated market with a lot of competitors which made it hard for distributors to place focus on smaller brands. From the interview with Kristian Torsson it evident that the awareness and respect to these limitations is a driving force why Sneaky Steve want to have a strong foothold in the domestic market.

11.4   Mr. Bear Family (B3) Mr. Bear family is another Gothenburg based lifestyle brand which focuses on beard care products for men. The company was founded in 2012 by Björn Landen as a side project alongside of his studies to become a brewery technician. Along with his partner Sandra Hansson they worked on weekends with this passion project to create products for the bearded man. Since then they have tried to further appeal to this lifestyle by including lip balms and shoe waxes and although some information was left out of the transcript as it may be regarded as trade secrets, other products which will further strengthen their positioning as a lifestyle brand. The interview was conducted with Sandra Hansson. Starting Up (T1) As previously mentioned the company was started as a hobby project along side of the studies of the founder Björn. The process was fast and Sandra described in the interview how from a very early stage distributors contacted them, wanting to sell their products in international markets. Aspiration and Culture (T2) Sales is not the primary objective of Mr. Bear family. A brief comment was made on that fact that they do need to run a business, but that the driving factor behind the organization is not volumes. They are passionate about what they do and they feel fortunate, or “spoiled” as Sandra expressed it, that distributors were so keen on selling their products to their respective markets. When it comes to adapting products to both domestic and international markets whilst keeping an eye on the competition, the impression was that they stay true to their beliefs and try not to alter the products too much. Mr. Bear Family have three scents that they work with and although expanding into shoe wax, lip balm etc. they hold true to their core beliefs. Although the company’s primary connection international markets is via distributors, but since they want to keep direct contact with the end consumers and have an open

25

dialogue with them about their products, as their opinions are highly respected, they have an online shop which they distribute world wide from. “We sell through our online shop internationally too but it is on a very small scale but

we keep it because it is fun to have a direct connection with our consumers” Human Capital (T3) International experience was not an element that was represented in the company prior to the start. The characteristics of the firm, with regards to skill set and qualities, other than the aspiration and culture (see above), were not highly emphasized in the interview. Despite this the company have now made several additions to the team to keep up with demands from distributors. Product (T4) In the interview with Mr. Bear Family, a lot of emphasis was put on the fact that 1) international distributors approached them from a very early stage, 2) the rapid expansion of the company meant a strategy for internationalization was absent and 3) the products seemed to be very timely in the markets they entered via distributors. The pull factors from distributors and the trends in those markets made the timing of Mr. Bear Family a key factor. They did not have to look for potential distributors but distributors came to them asking for products to meet the demand in their international markets due to rising beard trends. Note that in the below citation there is an element of Network Management (T7) too. “We also feel kind of spoiled because we have not reached out to distributors that much

but they have mostly come to us. So we have been lucky that so many of those have turned out to be a good match with our company and we’ve just kept building on those

relationships”

Branding Strategy (T5) A part of Mr. Bear Family’s branding strategy is to approach the selling of their products as a holistic experience for the now very educated and informed consumer. Barbershops that like to work with their product and initiate it themselves is an important element as they act as in official brand ambassadors for the brand. Opportunity and Knowledge Creation (T6) Due to the fact that Mr. Bear Family, as they perceived it themselves, were “spoiled” by the fact that distributors came to them, they have not spent as much time displaying their products or traveling around at events to meet potentially new distributors and taking an active role in creating opportunities and knowledge Network Management (T7) Several aspects of Network Management were identified in the Mr. Bear Family interview. Firstly, the company actively works to balance how the different distributors work with the brand. Some may need a lot of support to be able to work with it while others manage quite independently. There needs to be a consistent use of the brand so it is the same in different places.

26

Secondly, the role of contacts within the network who secure other business relationships on behalf of Mr. Bear Family was described as incredibly important. A brief example was made of a distributor on one country whom recommended the products of Mr. Bear Family as they were looking for something just like that for their markets.

“Networks are incredibly important. Whatever market or industry you work in. If we count our ’beard network’ it has helped us a lot. It is a lot of mouth-to-mouth in this industry, and that is how we have spread. We might have worked with someone in

Germany or Italy and then they meet someone is, let’s say, Spain who are looking for something similar and then they give them our contact info and yea. That is how its

works.” Institutional Support (T10) The company have not used any government support or programs in their internationalization effort. Personal networks were described as the helping factor when seeking advice in certain matters regarding the export of their products. Awareness of Limitations and Capabilities (T11) One of the challenges for the company has been the surge of other companies wanting to get in on the growing beard trend. Mr. Bear Family were alone of the market when they launched, which has most likely contributed to the fact that distributors came to them. The challenge has then been when the markets fill up with competitors and imitators, but according to Mr. Bear Family the consumers will know what brands are genuine and it is often those ones that survive past the big wave while others slowly will fade out from the markets.

11.5   Kasperi Kasperi is a Helsinki, Finland based brand that started to make bicycling specific functional leather bags locally in Finland from vegetable-tanned leather back in 2010. The company was formally established in 2015 when three founders decided they would make Kasperi a real company. They have since evolved into making leather bags and backpacks with a focus on versatility, durability, sustainability and local Nordic production. It is still a small local brand, however it has since entered the German, Swedish and Danish markets, with its sights on the Japanese and Korean markets. Until this day it has had its products sold in Germany, Belgium and Austria as well as online around the world. The interview was conducted with Janne Kasperi Suhonen. Starting up (T1) The idea that sparked the creation of Kasperi came out everyday problem identified by the founder, Janne Kasperi Suhonen. Janne used a bike as a means of transportation in Helsinki but was frustrated with the fact that the bicycle bag that he used kept breaking due to poor design. This caused Janne to get the idea of start making his own bags. “When the messenger bag I had bought broke again I got annoyed with the quality of it.

So then we made a prototype.”

27

According to Janne he has always been into making and designing things on his free time so making a bag was just another project for him. The idea from the beginning was that if these prototypes work well, he would make ten and sell them to get the money he had put in developing it back. When the first bags had been sold, more people started asking for them and Kasperi became a side to his day job as a photographer and videographer. He thought that if he could make a small side profit from it, it would be good income on the side, however as production scaled up, costs also scaled up to keep the production up and side income proved an unrealistic concept. In early 2015 two of Janne Suhonen’s friends approached him about wanting to join Kasperi and try to make it something other than just a side project. This came at a good timing since Janne was thinking about what to do with Kasperi. A limited liability company was set and Kasperi was officially its own company. Aspirations and Culture (T2) When the first Kasperi bags were made, all the people around were trying to advise Janne Suhonen not to produce them in Finland. In the end he decided to make everything his own way as local production was something he was really keen on using. The three founders of Kasperi are doing Kasperi out of enjoyment and they want to focus on good quality and with local work and materials. Internationalization in scale is something more for the future, although their products are already sold abroad and they think about it and attend tradeshows yearly while the main focus is on the domestic market and the online shop. Human Capital (T3) The three founders of Kasperi come from distinct backgrounds. Janne, the original founder and designer is a photographer and videographer, Matti is a technical and marketing guy in a service design company in Helsinki and Mikko is a former officer of the Defence Forces. Matti has built the website and maintains customer relationships actively. Janne takes care of designing, prototyping, photography and production. And Mikko helps with the administrative tasks and production. Product & Branding strategy (T4 & T5) The product are in the center of Kasperi with a majority of the efforts put into design, prototyping, production and materials sourcing. Kasperi attempts to make all its products "functional, long lasting, bags that should be versatile, good looking and sustainable”, according to Janne Suhonen.

"And you really see how people get psyched up about that we are making in Finland, the Market likes it a lot, and in five years time the atmosphere has gotten a lot better in

this regard.” From the interview it seems as though there is a trend surfacing in Finland. Kasperi’s experience in trade shows and visiting shops abroad has also been that it is hard to make an impression on shops with your brand if you do not have any brand awareness as a small new company, but that is when the story makes a big difference. The strength of the Kasperi Brand is in its authenticity and local supply chains. People get impressed by it because they do not see such brands often, according to Janne Suhonen. The existing customers of Kasperi appreciate it and there clearly is a market for it, however the

28

marketing communications and PR needs to be stronger to keep the consumers buying. Kasperi also hopes to increase sales over its web shop over time so that it could be its main sales channel.

"They wanted to know the materials, the production, the certificates of the leather etc. That seemed to be a very German quality to get as detailed of an explanation of the

product as possible.” A challenge for Kasperi is also that since their production is in the Nordics, and priced in the mid-high range but not luxury, the margin for the retailers is not as good as the cheaper items made from cheaper materials in cheaper labor countries. This provides the retailers also with less incentive to sell the products. However, some retailers understand and value the Nordic design and craftsmanship over the fact that the margin is less. Opportunity and Knowledge Creation (T6)

"Originally we thought about going to Sweden first but then there was some organic demand from Germany online and we had a online campaign through an offer website

that is pretty big in Germany and that was kind of a market research for us to figure out is it possible to sell well in Germany without any brand awareness with these prices

and online… We also got messages from our friends and customers that why don’t you try Germany there is demand for your type of products there, so we went there."

Kasperi’s experiences in scouting for new markets has been mostly in Germany. They contact most shops they intend to visit in advance, but sometimes the shops do not have time to answer so they often just end up walking into the shops. Telling the story and explaining the product has been making the biggest impression. Store owners have been getting very curious, especially of the quality of the materials and the fact it was made in the Nordics. It was beneficial for Kasperi to talk with the store owners for as long as it took, because they would also learn about what the German market values about the Kasperi products. Meeting people informally sometimes gives you the opportunity to talk more and build a stronger base for a relationship, in comparison to a crowded trade show. On one particular case they also learned a lesson when a very promising new business relationship was lost due to talking to another business close by. The businesses were not competitors but what made it matter was that the promising relationship wanted exclusivity and due to communication that was not clear. Doing as many business and network transactions with the right kind of people teaches them a lot and opens opportunities. When going to trade shows with their own stand there are many people so often it is just about telling your story to people quickly and showing the products, exchanging contacts and in the end the good ones either come back or you will remember and contact them again. In trade shows buyers also do not have a very long attention span, so you have to be more sales oriented. When you are active in your stand people also stop and listen from the side and that attracts attention, deeper one on one conversations do not let people enter the conversation. In those situation there is not as much time as

29

they would like, so they want to take a contact to as many people as possible, try to create a buzz around the stand that also makes people curious. Network Engagement & Network Management (T7 & T8) For a small business with a cost and logistics structure like Kasperi they have learned now that they should concentrate on finding a small amount of good partnerships instead of many retailers. A large network of sellers is difficult to manage, educate and get engaged with the resources Kasperi has. It takes time to find the right partners and more time to build a relationship with them, getting them committed takes persistence. In many cases the right partners for Kasperi are also small retailers, and they have similar resource problems so even if there is an initial excitement about future partnership, it often takes many informal meetings and gestures of commitment before the real partnership that works for Kasperi materializes. Sometimes it demands many contacting efforts even after a verbal agreement before any transactions happen, even in a case of a Swedish supplier of raw materials it demanded many efforts to buy materials from them. Support Network (T9) The support networks Kasperi has acquired have been other small local brands through a joint product development project with a local bicycle brand, joint marketing efforts and events with other local small brands and a government supported program about fashion and lifestyle brand exports where other local brands attended. The benefit from the support networks has been finding producers, hearing about suppliers and getting tips about trade shows and feedback about marketing campaigns. Many of the brands help each other whenever they hear about things that could help the others. There has yet to be joint internationalization efforts but there is definitely a potential for that in the future. Institutional Support (T10) The Finnish government has several support systems for young Internationalizing SMEs. There is a grant for internationalization of up to 50k euros and several loans for small companies. Kasperi has not applied for these yet since there is a burden of bureaucracy and reporting which at this time would take too much from their resources. There is also government subsidized programs that help prepare companies for Internationalization in various industries. Kasperi attends a Fashion and Lifestyle brands growth and exports -program which has been helpful in terms of gaining knowledge and networks within the Nordics. The program will also facilitate a joint export trip to Korea and Copenhagen later this year. These programs when well designed are considered beneficial by Kasperi, however they have yet to provide concrete results for them. Awareness of Limitations and Capabilities (T11) There are several challenges perceived by Kasperi in internationalization. First Finland is not perceived to be as networked in this industry in relation to the rest of Europe as for example Sweden and Denmark. The supply chain of products is a challenge when most of the materials are rare, preparing the vegetable tanned leather has a long lead-time and production facilities are

30

small. This is important in regards to internationalization since reliability in supply can make or break all the efforts put to networks and business relationships. This is also what many buyers want they want a reliable partner, so Kasperi has been working on growing its network of suppliers and sub-contractors for being able to supply the products with reliability. The small size of batches also limits their capability of creating partnerships with a large number of good partners but so far it is not a problem since the focus is on starting with a small number of quality partners.

12   Data Analysis

The following section presents the data analysis. The themes identified are categorized into groupings and analyzed in sections. The structure of the analysis-per-section is as follows. First a presentation of the themes and their connections is made. Secondly, the themes are connected to existing literature. Thirdly, limitations of current literature in explaining the identified recurring themes are discussed. Lastly, observations and the amount of emphasis that was placed on the respective themes in the interviews are discussed.

12.1   T1+T2+T3: Interfirm attributes Starting Up (T1), Aspirations and Culture (T2) and Human Capital (T3) are similar themes because they are interfirm specific traits. Starting Up (T1) concerns the historical background of the company as well as the ideas and the start up process of the organization. Because the startup process is a historical event, it does not develop from factors such as increased knowledge. However, from the empirical data it was evident that it may be used as a communications strategy, a story, as will be expanded on later in this study. Aspirations and Culture (T2) regard the ambitions, goals and objectives of the firm as well as the organizational culture. Aspirations and Culture can also be born or influenced by the events that occurred during the Starting Up phase. Human Factors (T3) which regard qualities and skills of the entrepreneurs and individuals within the organization. With the exception of the Starting Up process, these other attributes evolve over time. Prior to applying current theories to the empirical data a note must be made with regards to Aspirations and Culture (T2) and Human Capital (T3), t was evident that the firms not only brand themselves to consumer who want to associate their choice of brands with their personal and social identity as well as portraying a desired lifestyle, as the definition of lifestyle brands attain (Cătălin and Andreea, 2014), but from the qualitative data collection it seemed as though the personnel behind the organizations adhered to a similar image of that which they aimed at portraying towards consumers. Being genuine was a common factor across all the interviews and several interviews made claims such as sales and volumes are not the driving forces behind this company. The interpretation of this is that the desired image that lifestyle brands want to portray, disregarding the internationalization process for a moment, is rooted both the reasons why the companies started and the way-of-life of the personnel behind the organizations.

31

Aspirations and Culture (T2) have a strong correlation with RBVs of internationalization. Distributors, capital goods and even factors such as design could be replicated by competitors, thus would not be labeled resources according to Barney (1991) and Grant (1991). However, depending on the complexity of the relationships or design they may be considered as “Costly-to-Copy” thus would qualify as resources. The core values and the aspirations of the managers, drive the businesses in both domestic and international markets, they are also difficult to copy i.e. costly-to-copy as discussed in the study by Conner (1991), the firm’s Aspirations and Culture (T2) are also valuable, rare, imperfectly imitable and not easily substituted as they are embedded in the foundation of the company, therefore they can be defined as resources. As RBVs overlap with the international entrepreneur perspective, Aspirations and Culture (T2) and Human Capital (T3) can be related to the international entrepreneur perspective as well. Alvarez and Busenitz (2001) recognized individual-specific resources described as resources that aid the process of collecting, using and evolving resources as well as identifying strategic opportunities for the firm. Important firm-specific factors regarding internationalization recognized in our interviews were the individuals, in other words Human Capital (T3) with their own skills, ambitions and drivers, that collectively form the Aspirations and Culture(T2) of the company with a relation to the Starting Up(T1) events. This fusion of entrepreneurial perspective and RBV recognizes these individual-specific resources as factors contributing to making strategic decisions, therefore the two themes discussed (T2 and T3) relate to this emerging perspective. One aspect of the Uppsala revisited model (2009) is the gradual acquisition and incorporation of knowledge in the organization. As previously discussed, Aspiration and Culture (T2) and Human Capital (T3) are non-fixed variables as they may develop over time. It could therefore be argued that both Aspirations and Culture (T2) and Human Capital (T3) are subjected to gradual change from the acquisition and implementation of knowledge, thus reflect elements of the Uppsala revisited model (2009). This coincides and is also a reflection of Johanson and Mattson (1993) network based perspective where the authors argue that gradual learning is affected by networks. Although not explicitly stated in the empirical data gathered in this study, it was implicitly apparent in the interviews that networks facilitate gradual learning to the focal companies. Aspirations and Culture (T2) and Human Capital (T3) therefore reflect both the network perspective and the Uppsala model. Although both the Uppsala model, network perspectives and international entrepreneur perspectives can be applied to themes discussed above, the most applicable perspective on Aspirations and Culture (T2) and Human Capital (T3) is the RBV. The shortcoming of RBV, as identified through this study, is that although various RBV perspectives recognize resources as both being capable of being tangible and intangible, little emphasis is put on explicitly stating and explaining the importance of some of these intangible factors. The limitation in the Uppsala Revisited model is that they do not explicitly acknowledge the importance of the personal qualities or aspirations of the entrepreneur. They instead assume that these things are implicitly carried in the “Knowledge” concept in their model, since the individuals are carriers of the knowledge. However, we argue

32

that this can change with time as the individuals may be replaced by others with fresh entrepreneurial drive while having the same knowledge and have an impact on the company's performance. The individuals are not only carriers of the knowledge but executors of the process of using that knowledge, in for example Opportunity and Knowledge Creation. Human Capital (T3) have a strong correlation with RBVs of internationalization. On one hand, it could be argued that skills, previous experience and qualities that make up this theme are costly-to-copy, as expressed by Conner (1991), therefore would be regarded as an intangible resource for the firm. On the other hand, as Grant (1991) argued that resources have to be durable for the company to enjoy a competitive advantage, and since individuals in a firm may leave the organization for various reasons Human Capital (T3) may not be labeled as a resource for the firm, if Grant’s (1991) perspective is to be considered. A remark to be made is therefore that RBV may allow for too much freedom in defining and mapping resources which can lead to misinterpretations and misjudgement of what are actually considered key resources for the firm. The firms’ interviews placed high emphasis on being genuine, putting passion into their work as well as both making direct and indirect references to skills and individual qualities and competencies that contribute to their international endeavors. Starting Up (T1), Aspirations and Culture (T2) and Human Capital (T3) are therefore crucial interfirm attributes that are applied and developed to each part of the internationalization process. As previously mentioned, current literature place little emphasis on explicitly stating and explaining the importance of some of these intangible factors discussed, that being said a humble approach must be adopted as SME internationalization theories are continuously evolving and adapting to try to explain evolving SME processes and behavior.

12.2   T4+T5: Product and Brand In the context of our research the Product (T4) it is a conceptual term chosen to signify both the actual tangible product, and the demand it creates on the market. In other words, it could be described as the product and the product-market fit. The Brand(T5), on the other hand, signifies the brand itself, its branding and the firm’s marketing communications. Although the physical product itself is a tangible asset and a brand is an intangible asset, the author of this study argue that the two are inherently connected. Brand equity is defined by Farquhar (1989) “the added value" with which a brand endows a product”. Therefore, the brand can be seen as a component of the product and the product as a component of the brand. In this study, it was evident that the firms emphasized the role of their products and importance of their brand and story in relation to their internationalization efforts. Especially in relation to their internationalization, it was apparent that the entrepreneurs believed the strength of their product had a significant influence on the overall success and influenced the other aspects such as Network Engagement (T8), Opportunity and Knowledge Creation (T6) positively.

33

The theory that closest reflects and treats these identified themes would be the resource-based views. Resources are defined as “fundamental drivers of performance and competitive advantage” and costly-to-copy attributes (Conner, 1991). They are also defined as valuable, rare, imperfectly imitable and non-substitutable (Barney, 1991). A strong product and a brand arguably fulfill these characteristics, however this also can depend on the complexity of the product and value of the brand since a low complexity product may be easily counterfeited or mimicked by competitors. The Uppsala revisited model (Johanson & Vahlne, 2009) introduced the concept liability of outsidership, which is described as the biggest source of uncertainty in a firm's internationalization process. The focus in their model on internationalization is that gaining a better network position is the goal that allows business relationships to develop into more valuable ones and gain a better bargaining position with new relationships. From a process point of view, how companies overcome this barrier is still in need of further research. In cases (B1, B2 and B4) findings suggest a strong product and a brand should facilitate other aspects of work related to internationalization efforts. Therefore, we argue that since outsidership is the biggest creator of uncertainty, a strong product, brand and communications seem to contribute in gaining a stronger network position in the eyes of new markets. Hence they help in overcoming liability of outsidership for the companies. On another note on case B3 and to less extent B1 the findings of this study suggests that a strong brand and a product-market fit where word of mouth creates a pull effect that creates international demand without active network creation. In the particular case in the B3 interview there was a strong pull effect created by the product. What may have contributed to this demand or product-market fit, may have to do with the low price point of the product, the strong brand, a trend and the quality of the product itself. This would be much in line with the RBV where the product and brand are a “fundamental drivers of performance and competitive advantage” (Conner,1991). Two observations about the limitations of current SME research regarding these themes are: 1) the Uppsala revisited model does not place the product and brand in such a position of a “fundamental driver of performance”(Conner, 1991), 2) product and marketing communications are a strong point for the company, it diminishes the importance of engaging and actively creating new networks, an example from interview B3: “We also feel kind of spoiled because we have not reached out to distributors that much but they have mostly come to us. So we have been lucky that so many of those have turned out to be a good match with our company and we’ve just kept building on those relationships”. What this could mean from the point of view of the RBV is that there is a link between different resources that enable them to strengthen each other. Arguably had the company developed its networks more actively it could bring even better results, but not being active on the Network Management front has not been an issue for the rate of internationalization these particular entrepreneurs are comfortable with.

34

12.3   T6+T7+T8: Networks and Opportunity Creation Opportunity and Knowledge Creation (T6), Network Management (T7) and Network Engagement (T8) were recurring themes that were identified in all of our four interviews. Opportunity and Knowledge Creation (T6) describes behavior where the interviewed companies have a actively engaged in efforts that facilitate the acquisition of knowledge and encountering opportunities systematically or by chance. The theme is interesting especially because it was both carried out as a business strategy and through informal methods. It is inherently connected to Network Management (T7) since many of the opportunities and knowledge acquired grow out of engaging in discussions with various networks. Network Management (T7) includes mapping the networks of the new markets, evaluating the most valuable connections and making efforts engaging on those. Network Management (T7) was seen as a fundamental part of internationalization. It is connected to the theme Network Engagement (T8) in that in both the quality of the relationship is extremely important. Network Engagement (T8) was identified from both explicit and implicit references to the existence of exceptionally valuable and committed international business partners or relationships. Network Engagement (T8) was identified as a separate theme, with regards to Network Management (T8) as Network Engagement (T8) regards the engagement of the partners and is not an actual taken by the firm although it may be managed and influenced by the firm from making strategic decisions. Factors affecting the value of these engaged networks were mentioned to be the relationship, the qualities of the individual and the way the partner organization operates. The network approaches discuss the impact of Social Capital on internationalization. According to the network approach presented by Davidsson and Honig (2003) “...entrepreneurs would be well advised to develop and promote networks of all sorts, particularly interfirm and intrafirm relations”. However, Andersen and Buvik (2002) argued that “...relatively few researchers have focused on the process by which firms select where or with whom the transactions should be performed”. The interviewed companies saw this as a process of developing and evaluating the relationship, thus in current literature there is no consensus over the importance of with what partners a focal firm conducts business transactions with, nor is there a high emphasis on this despite being mentioned by Andersen and Buvik (2002). The type of activity within the identified themes that emerged during the interviews relate to Opportunity and Knowledge Creation (T6), as well as Network Management (T7). An example of this can be seen in interviews B1, B2, B3 and B4, where valuable contacts were made out of seemingly trivial situations. B1 made an explicit reference to such an occurrence where a future international client was initially met while in a liquor store. These kind of observations supported by the network theories is that serendipitous encounters can happen anywhere, anytime by actively pursuing and promoting networks “of all sorts” (Davidsson and Honig, 2003), essentially creating the opportunities (T6) for the serendipitous encounters. This also is in line with the observations for Network Management (T7). According to Blankenburg et al. (1996) cooperation in relationships increases their significance and that has also to do with the commitment in partnership

35

style relationships that we identified in the Network Engagement (T8) theme in the research, it supports the notion of these relationships being highly symbiotic in their significant value for both parties involved. Opportunity and Knowledge Creation (T6), as well as Network Management (T7) were themes that were also touched upon in the Uppsala revisited model by Johanson and Vahlne (2009). “Network coordination” is described as the coordination of “joint productivity of a set of relationship partners “, and is expected to become more important in the future for internationalization (Johanson and Vahlne, 2009). The Uppsala revisited model recognizes the value of networks as a source for learning and knowledge creation. Johanson and Vahlne (2009) presented a concept in their model, “the liability of outsidership”, which is related to network position and overcoming it is related to commitment and trust building, also identified in this study as a component in the observations regarding Network Management (T7). International Entrepreneur research suggests the entrepreneur is a key element in expanding the firm beyond borders (Miesenbock, 1988). In relation to Opportunity and Knowledge Creation (T6), the entrepreneur is in an imperative role of executing the process. We argue that these themes are interconnected to the human capital, however the themes as themselves as important processes should be a part of the theory since the entrepreneur also needs to evaluate what to use his limited resources for. Alvarez and Busenitz already articulated this in their 2001 paper: “...a result of taking an entrepreneurial perspective, one contribution to RBV is that we are now able to identify resources such as entrepreneurial alertness, insight, entrepreneurial knowledge, and the ability to coordinate resources, as resources in their own right”. The network approach is limited to describing internationalization through networks. While it promotes the acquisitions of all kinds of new networks, it fails to explain how to use limited resources carefully. It does not describe the process of identifying the right kinds of networks. The Uppsala Revisited model does not seem to stress the qualities of the Networks themselves such as in the case of Network Engagement (T8) where significant stress was put on the quality of the relationship. In the theme these partner company, in most cases a distributor, almost functions in a symbiosis with the focal company. Neither the Uppsala revisited model nor the network approaches put emphasis on the entrepreneur’s qualities or the partnership firm’s level of commitment and human capital. The RBV may struggle in explaining a process like Opportunity and Knowledge Creation (T6) in itself as a “fundamental driver of performance” (Conner, 1991). One may argue that this would be the development of an existing resource, however opportunity creation is an active process both in developing and creating new resources with value to the firm. Therefore, the interpretation of this is that it is as an important component and needs to be explicitly conveyed in the integrated model, later presented in this study. This category is a combination of resources and important processes. Whether those processes can be seen as a resource either by themselves or separately is an interesting question, but the conclusion of this study is that RBV should be updated to make this

36

clearer. In general, the RBVs do a good job in explaining in evaluating the relationships as resources and taking into account the the most important networks, something that the network model struggles with. There is also an inherent connection to the entrepreneur himself (T2 and T3) since T6 and T7 are both process driven elements that are carried out by the individual entrepreneur. These three themes (T6, T7 and T8) were perceived to be in the very essence of the RBVs, especially for B1, B2 and B4. However, it was observed that there is also a mutually beneficial interdependence to the Product (T5) and Brand (T6) themes, as well as to the T2, T3 and T11 since strength in any of these is perceived to make the other parts of internationalization less challenging. A stronger product and a brand leads to a stronger bargaining position in new international networks, while appropriate partnerships could be beneficial for the Brand (T5), and spreading brand awareness.

12.4   T9+T10: External Support Support Networks (T9) and Institutional Support (T10) are analyzed collectively because they are external organization or individuals that are not a part of the firm but that can add value to the firm in various forms of support. Support Networks (T9) are networks of non-competing organizations and individuals who assist each other informally. From the interviews, Support Networks (T9) were identified from mentions of aspects such as personal informal networks from which information was gathered and used. Institutional Support (T10) include assisting activities from private or governmental institutions that aim to aid the internationalization process of firms, in the form of consultation services, subsidies, tax reliefs or grants for internationalization to name a few examples. Since Support Networks (T9) and Institutional Support (T10) are external factors that contribute with value primarily in the form of information and knowledge, they can be inspected within the Uppsala revisited model that describes the internationalization process as a gradual learning process. Therefore, since it can be interpreted that both Support Networks (T9) and Institutional Support (T10) can contribute with information that can be translated into knowledge throughout the firm, these themes reflecting aspects brought up by Johanson and Vahlne (2009). It must be noted that Johanson and Vahlne (2009) stress that the knowledge is discussed in relation to foreign market knowledge leading to increasing commitments. It could therefore be argued that not all Support Networks (T9) and Institutional Support (T10) contribute to the internationalization process. However, interview B3 discussed how personal support networks contributed with knowledge provision which although not exclusively focused on their internationalization efforts but as international sales accounted for 80% of firm B3’s sales, it can be assumed that knowledge gained from Support Networks (T9) contributed to their internationalization efforts. Another connection between current literature and T9 and T10 are that the themes reflect a RBV of internationalization. As previously pointed out, RBVs are very generalizing, which is not necessarily a negative aspect. It allows for the connection to be made between Support Networks (T9) and Institutional Support (T10) and resource-based theory as with the application of such perspectives it could be argued external

37

organizations and individuals are tangible factors with intangible resources of their own which may give value to the focal firm. As previously debated however, taking on the Grant (1991) perspective of RBV which state that resources have to be durable, the predicament is that since T9 and T10 are external factors they may not be considered resources and may not be considered durable. This however can be solved by approaching this from the point of view of Ahokangas (1998) who argued that resources can be viewed from four perspectives: 1) internal resources in a firm oriented mode, 2) external resources in a firm oriented mode, 3) internal resources in a network oriented mode and lastly 4) external resources in a network oriented mode. Support Networks (T9) and Institutional Support (T10) could therefore be considered resources for a firm treating them as either external resources in a firm oriented mode or external resources in a network oriented mode. T9 and T10 also relate to the network approach presented by Davidsson and Honig (2003). The approach considers social capital as a determining factors of success in internationalization endeavors. The social capital they discuss include factors such as the role of friends, social network and acquaintances that own businesses. In the case of interview B3, the previously brought up example of how their personal support networks contributed with knowledge provision is evidence of how one particular network approach to internationalization reflect the identified T9 and T10 themes. It is possible to make conflicting interpretations on what are resources and what are not, for example Institutional Support (T10) is also possible to define as a non-resource. According to (Barney, 1991) resources must be rare, not rare resources can not be considered as resources since they are easily substitutable and do not provide a competitive advantage, in line with this perspective Institutional Support (T10) can not be considered a resource since at least in its country of origin it is available to all. However we argue that the Institutional Support in the form of an Internationalization grant should be qualified as a resource, and have included it in our integrated model to be presented later, since it can enable and motivate trips to International new markets. It certainly is valuable however it is not rare. Another identified problem is that several network approaches to internationalization explicitly state that the relationships between the nodes in the networks need to be business relationships. Davidsson and Honig (2003) perceived networks as not only professional but also personal. This is evident of how there are evident gaps within existing perspectives of SME internationalization. Little emphasis was placed on T9 and T10 in interviews B1-B4. This could be explained by the fact that they are supporting activities may not be perceived as essential to the firm but can add value if used effectively. Support Networks (T9) represented a bigger portion of mentions and it is difficult to accurately get an idea of how much these firms use their Support Networks (T9) as the exchanges of information between Support Networks (T9) are mainly informal and almost always undocumented. Knowledge gained from these networks may not always be obvious thus one interpretation is that the entrepreneurs may place little emphasis on the role of Support Networks (T9) due to the fact that informal nature of them make them hard for the entrepreneurs themselves to label them as crucial factors in their internationalization endeavors. Institutional

38

Support (T10) is easier to define as it involved a formal process often both in cases of consultation and benefits such as grants. The bureaucracy was seen as a burden hindering the use of these services otherwise seen in a positive light. The entrepreneurs, however, stressed that it was not a crucial element, although B1 and B2 used Institutional Support (T10). Therefore, as previously mentioned, they may not be perceived as crucial elements for all firms in their internationalization efforts, but they can add value if used effectively.

12.5   T11: Awareness of Capabilities and Limitations The theme Awareness of Limitations and Capabilities (T11) is closely related to interfirm traits (T1, T2 and T3). The identified recurring theme in the data collection was emphasized by interview B2 and B4 which showed strong awareness of the current capabilities and limitations for the firm. B2 for example wanted a strong foothold in the domestic market as it did not want to have to face the possible outcome of being too dependent on international distributors in case they would place low orders. Equally important as Aspirations and Culture (T2) and Human Capital (T3) is this theme (T11), and the decision not to include the theme within T2 or T3 is because as T2 is a loosely defined overarching feel of the firm and T3 is related to skills and qualities, T11 is a cognitive ability to recognize the firms limits and capabilities. One may argue it is a subcategory of Human Capital (T3) but in this study it is analyzed as a separate theme, despite being an interfirm trait. As with the other interfirm traits (T1, T2 and T3), Awareness of Limitations and Capabilities (T11) is affected by the gradual learning, thus being applicable to the Uppsala revisited model. However, T11 most accurately reflect the merger of RBVs and international entrepreneur perspective introduced by Alvarez and Busenitz (2001), whose contribution was the recognition of “…entrepreneurial alertness, insight, entrepreneurial knowledge, and the ability to coordinate resources”. Entrepreneurial alertness may be treated as ability to recognize strategic opportunities, but it may be argued that aspects identified in this study (T11) could be included. Johanson & Vahlne (2009) also discuss Sarasvathy’s (2001) “effectuation process” that explain the entrepreneurial process of starting a company in situations of uncertainty, where entrepreneurs start with what they have and start a new company while minimizing potential losses. According to Johanson & Vahlne this process is related to the internationalization process, however the authors of this study argue that this process is very close to the identified Awareness of Limitations and Capabilities (T11) theme. The general conclusion, however, is that the ability of firms to being aware of their own capabilities and limitations is an intangible asset for a firm, thus reflecting a resource-based perspective. As previously discussed, limitations of the RBV are that there are several opinions regarding what constitutes a resource thus no general consensus is reached. Focusing on the perceptions of Grant (1991), the aspect of durability, which the author argued was essential in the definition of a resource, has its limitations. The authors of this study argue that since certain intangible resources contained within the firm are knowledge and networks held by personnel within the organization whom may for some reason leave the firm, the concept of durability may need refining. The reason for this is because themes T2, T3 and T11, identified in this study, are all intangible resources that

39

contribute with great value to the firm. These are not, however, as durable as e.g. a strong positive historical perception of the brand, but should be considered resources nonetheless. Interviews B2 and B4 made explicit references to theme identified (T11) yet it can be argued that implicit mentions of of the theme occurred in all the interviews. These implicit references could be interpreted as a connection between Network Management (T7) and Awareness of Limitations and Capabilities (T11). Interview B2 discussed how they would not engage or continue with a business relationship if a personal and/or professional connection was nonexistent. Such instances in the interviews are categorized at T7 but it could be argued that it relates to T2, T3 and T11 as they influence T7.

12.6   Integrated Model of SME Internationalization

Figure 1: Integrated Model of SME Internationalization

Above is the representation of an integrated SME model of internationalization. It is important to note that this is an integrated abstract model that aim to include several theoretical aspects from various models, merged with the empirical data collection. The

40

Uppsala revisited model stressed knowledge and network position but does not mention product as a driving force. Network perspectives similarly fail to emphasis the possibility of products being the driving force of internationalization. Certain RBVs of internationalization fail to emphasize the role of processes and the enabling role of not-rare resources. The model therefore aims to show the exchange relationships between the identified themes, grouped in four elements; Firm; Product & Brand; Networks & Opportunity and Knowledge Creation; External Support. recognizing the importance knowledge, resources and development of them, taking on a holistic approach that the focus is on the entrepreneurs and their international development. The green dashed box represents the activities, processes, outputs and attributes within the focal firm. From the model the black boxes represent the themes grouped into elements but not all of them are firm-external activities. The green box thus shows the overlapping nature of Networks and OKC with the firm and the external environment since networks are managed within the firm, Network Engagement(T8) is external but experienced by the firm, and opportunity and knowledge creation are activities conducted by the firm but in external environments. The blue rectangle is not an identified theme but illustrate actors in the international markets such as consumers, distributors and competitors. The black squares are all standardized and equal in size. The black squares represent grouping of themes:

•   Firm o   T1: Starting up o   T2: Aspirations and Culture o   T3: Human Capital o   T11: Awareness of Limitations and Capabilities

•   Product & Brand o   T4: Product o   T5: Brand

§   Brand §   Branding §   Marketing Communications

•   Networks & OKC o   T6: Opportunity and Knowledge Creation o   T7: Network Management o   T8: Network Engagement

•   External Support o   T9: Support Networks o   T10: Institutional support

In the model, Firm (T1, T2, T3 and T11) represent the focal firm and the attributes contained within the organization. The arrow from Firm to Product & Brand which then proceeds to International Markets represent the output of the firm that is experienced by and communicated to the consumers, either firm-to-consumer or via intermediates such as distributors. The arrow is double sided between Product & Brand and International Markets due to the push-pull nature in which a firms’ product may enter markets. This double sided arrow also represents the knowledge and feedback relationship between the actors on international markets and the output of the firm.

41

External Support (T9 and T10) represent supporting activities from certain external sources which ads value to the firm but are not their professional networks. The arrow from External Support leading to Firm shows the input of knowledge from the supporting activities into the organization. Networks & OCK (T6, T7 and T8), abbreviated from Opportunity and Knowledge Creation, represent the professional networks, the active creation of knowledge and the creation of opportunities in international markets. The double sided arrow between Firm and Networks & OCK show the exchange relationship between input of commitment and exchange of knowledge and information. The arrow proceeds between Networks & OCK and International Markets showing the management of networks in international markets, the engagement of networks in the international markets and the process of a firm to engage in activities that create opportunities and knowledge. Below is an abstract illustration of the findings of interview B3, showing the emphasis that was put on each respective set of themes. This is to demonstrate that certain models fail to show where entrepreneurs place significant efforts on and what drives performance. The size or significance of each box can depend on the company. The integrated SME model of internationalization presented above therefore allows the representation of significance in efforts according to the firms.

Figure 2: Abstract Illustration of Interview B3 Although abstract, a brief look at this representation would show that Product & Branding are the primary drivers of performance in the internationalization efforts of B3. As was the case, their product and brand satisfied a demand caused by rising trends, causing high focus on product and less effort on having to seek help from External Support. In their case the Network & OKC were also less important in comparison to other brands where more emphasis was put on these activities, this suggests that at least the Network and Uppsala based models may be underestimating the significance of the product by not including it as a driver in their models.

42

13   Conclusion

Relating back to the purpose of this study, the aim was to devise an integrated model of SME internationalization, in the context of Nordic lifestyle brands studying the key elements and the interrelationships stressed as crucial by entrepreneurs. To answer the research questions an empirical research identified the the themes that were perceived important in the internationalization efforts of Nordic lifestyle brands, and reflected this on existing literature about SME internationalization. Review of the academic literature helped the authors to identify the most relevant theories for the research. The theories selected were the Resource Based views, the Network Approaches, a revisited Uppsala model, the international entrepreneur perspective, I-models and the International Entrepreneur Conceptual model. An empirical research was conducted as a thematic analysis from four interviews with four Nordic lifestyle brands. The study identified eleven recurring themes from the interviews, which were grouped into four elements: Firm, Networks & OKC (Opportunity and Knowledge Creation), Product & Brand and External Support. The element “Firm”, is in a direct interrelationship with the rest of the elements. “Product & Brand” is additionally in a interrelationship with “Networks & OKC” and in a interrelationship to the International Market. “Networks & OKC” has a interrelationship with the Product & Brand as well as the the International Market. The study made the observation that these interrelationships can benefit the individual elements, i.e. strength in the “Product & Brand” element can benefit “Networks & OKC” in the case of negotiations with a new client in the International Markets. Therefore, the Elements live in symbiosis and can strengthen each other. None of the theories in the empirical findings perfectly described all the important elements for all the companies. On average the RBVs were able to explain most amount of the elements in most cases, and the Uppsala Revisited model also deserves a mention. Due to the inconsistencies and differences between the elements that the various companies would stress important, it seems that is not relevant to analyze the internationalization of companies solely on the basis of the method they choose to brand their companies. Therefore, RQ2 can only be answered incompletely. It is also concluded by the authors that since each of the models has their own strengths and weaknesses in explaining various elements identified as important to the internationalization of the companies, there is a real need for an integrated model that can help in holistically planning internationalization. Moreover, the authors learn that a successful internationalization of SMEs demands a holistic approach that emphasizes the individual strengths, capabilities and limitations of the company should be used in when creating an internationalization strategy.

43

14   Discussion

The strength of this research is in the qualitative nature of the study. With the adoption of a interpretivist philosophy, using inductive and abductive methods of reasoning, this research goes in-depth into the internationalization efforts of four Nordic lifestyle brands. A large amount of current research treat SMEs as a whole but the authors of this study argue that few studies have previously taken a look into internationalization efforts where the connecting factor is not the industry the companies operate but rather the method of branding and positioning themselves both in the domestic and the international markets. This study not only gives insight into the internationalization process of such brands but the connection between the themes and the current literature validate the recognized elements in their internationalization efforts. The themes in existing literature, as perceived by the authors of this study, serve as a tool in creating the integrated model of SME internationalization, which is the contribution of this research to current literature. Another strength of the model is the expandability and interrelations. The elements (black boxes) in the model can be resized to give an abstract illustration of what themes the entrepreneurs stressed were important in reflection to the performance of their own firm. This is an area of study the authors argue need further development to be able to provide models that not only give a theoretical overview and simplification but that may also be used more practically. The recognition of interrelations is that we discovered that strength in some specific elements i.e. the brand and product can provide a competitive advantage in the processes of other elements, such as Network Management(T7). As a humble approach is adopted, recognizing the fact that further data would be needed in order to generalize the conclusions, the authors of this research identify several limitations. One of the main problems has to do with the scope of the study and the vast amount of literature and perspectives there are on SME internationalization. The study made references to international entrepreneur perspectives, Innovation model, RBVs and network approaches yet there is a vast amount of perspectives within these perspectives, including criticisms of the literature that it is difficult to get a holistic overview of all arguments. This study also primarily focused on acknowledged literature ranging between 1977 and 2009 thus a recommendation for further developments of an integrative model is to study more current perspectives including less well-known theories. The study also did not include the impact of physical or capital resources contained within the firm that are used in the production of the outputs of the firm. The interviews were based around interfirm traits, the international environment and supporting activities thus no questions regarding physical resources were asked. This, however, may be hard to argue the relevance of including this questions since 1) the authors implicitly assume that it is contained within the interfirm traits and used in the development of Product (T4) and Branding Strategy (T5) and 2) a further study would need to be made to determine whether physical or capital inputs are a theme or implicitly included in the firm structures by the entrepreneurs. As a resource for a company it should be assumed that physical or capital resources do have a significant

44

impact for the internationalization of companies, but whether it can be a fundamental driving factor, should be investigated more. It could be argued that looking at the cases of only four companies may not yield sufficient information to generate a complete integrative model. To further develop on this study and to test the validity of the themes identified would be to conduct a qualitative study where a larger pool of companies answers questions relating to the significance of the themes. A similar qualitative study may also contribute with the identification of more themes, elements, interrelationships and processes. In addition, a quantitative study may be performed, where companies rank the significance of the themes in relation to their own internationalization efforts adopting a positivistic research philosophy applying a deductive approach on the analysis to aim to conclude whether or not the model presented in this study and themes identified are actually supported by a larger pool of companies. This kind of a research could be interesting in identifying and defining new types of companies for research, since companies could be pooled by the significance they put on the various Elements. SME internationalization is a continuously developing field of study and with increasing possibilities to take a company beyond the borders of the host market, internationalization is becoming less of a challenge for firms. Further studies on SMEs may differentiate SMEs by other methods of branding or by products. An interesting observation that was made regarding the second research question was that while method of branding did not seem to contribute to a similar type of internationalization pattern, aspirations and cultures seemed to. The observation was that companies where the founders were just running the business out of fun on the side would not put as much effort on the Networks & OKC Element, however their strength was in the product as a driver of internationalization. To verify this observation an additional study should be made with a research question about the effect of the aspirations of the entrepreneur to its internationalization. The field of study may also start considering creative approaches as to what are defined as SMEs to be inclusive of phenomenon such as small scale artists’ internationalization through exponential demand for their products i.e. songs. This study calls for further research to be creative and to find loopholes in current literature, including this study, to try to explain the increasing number of possibilities causing firms to internationalize which are not properly explained by existing literature on the subject matter.

45

15   References

Aharoni, Y. (1966). The foreign investment decision process. The Int. Exec., 8(4), 13-14.

Ahokangas, P. (1998). Internationalization and resources: an analysis of processes in Nordic SMSs”, (Ph.D). Universitas Wasaensis, Vaasa.

Alvarez, S. & Busenitz, L. (2001). The entrepreneurship of resource-based theory. Journal Of Management, 27(6).

Analytictech. (2016). Techniques to Identify Themes in Qualitative Data. Retrieved May 23, 2016 from http://www.analytictech.com/mb870/readings/ryan-bernard_techniques_to_identify_themes_in.html [Accessed 23 May 2016]

Andersen, O. & Buvik, A. (2002). Firms’ internationalization and alternative approaches to the international customer/market selection. International Business Review, 11(3), 347-363.

Andersson, S. (2000). The Internationalization of the Firm from an Entrepreneurial Perspective. International Studies Of Management & Organization, 30(1), 63-92.

Antoncic, B. & Hisrich, R. (2000). Intrapreneurship Modeling in Transition Economies: A Comparison of Slovenia and the United States. Journal Of Developmental Entrepreneurship, 5(1).

Autio, S. & Almeida, J. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy Of Management Journal, 43.

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal Of Management, 17(1), 99-120.

Bilkey, W. & Tesar, G. (1977). The Export Behavior of Smaller-Sized Wisconsin Manufacturing Firms. Journal Of International Business Studies, 8(1), 93-98.

Bryman, A. & Bell, E. (2003). Business research methods. Oxford University Press. Oxford New

York. First Edition. Cavusgil, S. & Naor, J. (1987). Firm and management characteristics as discriminators

of export marketing activity. Journal Of Business Research, 15(3), 221-235.

Cavusgil, T. (1980). The internationalization process of the firm. European Research, 8(6).

Chirban, J. T. (1996). Interviewing in depth: The interactive-relational approach. Thousand Oaks,

CA: Sage Publications. Conner, K. (1991). A Historical Comparison of Resource-Based Theory and Five

Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm?. Journal Of Management, 17(1), 121-154.

Cyert, R. & March, J. (1963). A Behavioral Theory of the Firm. Englewood Cliff.

46

Davidsson, P. & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal Of Business Venturing, 18(3), 301-331.

Dworkin, S. L. (2012). Sample size policy for qualitative studies using in-depth interviews.

Archives of sexual behavior, 41(6), 1319-1320. Gankema, H., Snuif, H., & Zwart, P. (2000). The internationalization process of small

and medium-sized enterprises: an evaluation of stage theory. Journal Of Small Business Management, 38(4).

Grant, R. (1991). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33(3), 114-135.

Greater Copenhagen. (2016). Retrieved 1 May 2016, from http://www.greatercph.com

Highsnobiety. (2015). 20 Danish Brands Every Highsnob Reader Should Know. Retrieved May 23, 2016 from http://www.highsnobiety.com/2015/02/04/danish-clothing-brands/ [Accessed 23 May 2016].

Highsnobiety. (2015). 20 Swedish Clothing Brands Every Highsnobiety Reader Should Know. Retrieved May 23, 2016 from http://www.highsnobiety.com/2015/04/09/swedish-clothing-brands/

Hofstede, G. (2016). Cultural Insights. The Hofstede Centre. Retrieved 1 May 2016, from https://www.geert-hofstede.com

Holm, D., Eriksson, K., & Johanson, J. (1996). Business Networks and Cooperation in International Business Relationships. Journal Of International Business Studies, 27(4), 1033-1053.

Hornell, E., Vahlne, J., & Wiedersheim-Paul, F. (1973). Export och utlandsetableringar. Stockholm.

Hymer, S. (1960). The International Operations of National Firms: A Study of Direct Foreign Investment (Ph.D). Cambridge.

Johanson, J. and Mattsson, L.G. (1993), “Internationalization in industrial systems – a network approach, strategies in global competition”, in Buckley, P.J. and Ghauri, P.N. (Eds), The Internationalization of the Firm: A Reader, Academic Press, London, pp. 303-22.

Johanson, J. & Vahlne, J. (1977). The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal Of International Business Studies, 8(1), 23-32.

Johanson, J. & Vahlne, J. (1990). The Mechanism of Internationalisation. International Marketing Review, 7(4).

Johanson, J. & Vahlne, J. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal Of International Business Studies, 40(9), 1411-1431.

47

Lincoln, Y. S. & Guba, E. G. (1985). Naturalistic Inquiry. Newbury Park, CA: Sage Publications. Long, T., & Johnson, M. (2000). Rigour, reliability and validity in qualitative research. Clinical

effectiveness in nursing, 4(1), 30-37. Lopez, C. & Fan, Y. (2009). Internationalisation of the Spanish fashion brand Zara.

Journal Of Fashion Marketing And Management: An International Journal, 13(2), 279-296.

Lynn Childs, M. & Jin, B. (2014). Is Uppsala model valid to fashion retailers? An analysis from internationalisation patterns of fast fashion retailers. Journal Of Fashion Marketing And Management: An International Journal, 18(1), 36-51.

Malhotra, N.K. & Birks, D.F. (2007). Marketing research - An applied approach (3rd ed.). Har- low: Pearson Education Limited.

Martin, J. (1979). Business planning: The gap between theory and practice. Long Range

Planning, 12(6), 2-10.

McDougall, P. & Oviatt, B. (2000). International Entrepreneurship: The Intersection of Two Research Paths. Academy Of Management Journal, 43(5), 902-906.

McLaughlin, H. (2007). Understanding Social Research. SAGE Publications Ltd. Miesenbock, K. (1988). Small Businesses and Exporting: A Literature Review.

International Small Business Journal, 6(2), 42-61.

Nagy Hesse-Biber, S., & Leavy, P. (2011). Chapters 1 & 2. N. Hesse-Biber & P. Leavy, The

practice of qualitative research, 3-30. Nicholas, J., Ledwith, A., & Perks, H. (2011). New product development best practice

in SME and large organisations: theory vs practice. Euro Jrnl Of Inn Mnagmnt, 14(2), 227-251.

Nordiskt samarbete. (2016). Norden. Retrieved 1 May 2016, from http://www.norden.org

Nordström, K. (1990). The Internationalization Process of the Firm in a New Perspective. Institute Of International Business, Stockholm.

Penrose, E. (1996). The theory of the growth of the firm. Long Range Planning, 29(4), 596.

Phillips McDougall, P., Shane, S., & Oviatt, B. (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal Of Business Venturing, 9(6), 469-487.

Reid, S. (1981). The Decision-Maker and Export Entry and Expansion. Journal Of International Business Studies, 12(2), 101-112.

48

Reid, S. (1983). Firm Internationalization, Transaction Costs and Strategic Choice. International Marketing Review, 1(2), 44-56.

Reuber, A. & Fischer, E. (1997). The Influence of the Management Team's International Experience on the Internationalization Behaviors of SMES. Journal Of International Business Studies, 28(4), 807-825.

Ritchie, J., & Lewis, J. (2003). Qualitative Research Practice. London: SAGE Publications. Rugman, A., Buckley, P., & Casson, M. (1977). The Future of the Multinational

Enterprise. Southern Economic Journal, 44(2), 410.

Ruzzier, M., Hisrich, R., & Antoncic, B. (2006). SME internationalization research: past, present, and future. Jrnl Of Small Bus Ente Dev, 13(4), 476-497.

Ryan, J. (2008). The Finnish country-of-origin effect: The quest to create a distinctive identity in a crowded and competitive international marketplace. J Brand Manag, 16(1-2), 13-20.

Saunders, M., Lewis, P., & Thornhill, A. (2009). Research Methods for Business Students (5th

ed.). England: Pearson Education Limited. Schwandt, T. (2000). Three Epistemological Stances for Qualitative Inquiry. Retrieved May 9,

2015 from http://www.uky.edu/~addesa01/documents/Schwandt.pdf Shenton, A. K. (2004). Strategies for ensuring trustworthiness in qualitative research projects.

Education for Information 22, 63–75. Singh, R. & Singh Mangat, N. (1996). Elements of Survey Sampling. Dordrecht & Norwell, MA:

Kluwer Academic Publishers. Stanford Encyclopedia of Philosophy (2011). Abduction. Retrieved May 9, 2016 from

http://plato.stanford.edu/entries/abduction/ Steensma, H., Marino, L., Weaver, K., & Dickson, P. (2000). The influence of national

culture of the formation of technology alliances by entrepreneurial firms. Academy Of Management Journal, 43(5), 951-973.

Tan, L. (2008). The internationalisation of Malaysian manufacturing small and medium enterprises(Ph.D). Southern Cross University.

The Guardian. (2015). Interiors: the new Scandi. Retrieved May 23, 2016 from ://www.theguardian.com/lifeandstyle/2015/apr/11/new-scandinavian-design-interiors

UPS, (2015). 2015 European SME Exporting Insights Study. [online] United Parcel Service of America, Inc. Retrieved May 23, 2016

49

https://www.ups.com/media/news/en/gb/European_SME_Exporting_Insights_Study_2015.pdf

Upton, G. & Cook, I. (2014). Inter-rater reliability. A Dictionary of Statistics. Oxford University Press.

Vernon, R. (1966). International Investment and International Trade in the Product Cycle,. Quarterly Journal Of Economics, 80(2).

Williamson, O. (1981). "The Economics of Organization: The Transaction Cost Approach. The American Journal Of Sociology, 87(3).

Woo, H. & Jin, B. (2014). Asian apparel brands’ Internationalization: the application of theories to the cases of Giordano and Uniqlo. Fashion And Textiles, 1(1).

Zahra, S., Ireland, R., & Hitt, M. (2000). International expansion by new venture firms: international diversity, mode of market entry, technological learning, and performance. Academy Of Management Journal, 43(5), 925-950.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16   Appendix

16.1   Appendix 1: In-Depth Interview Design

50

The Interview is divided to three parts:

1)   Company background to understand motivations, cultures and the brand better.

Why do you do what you do? (Purpose and Brand Mission related) Where do you come from? (Background of key people and company) What do you do? (What is the product, its key purpose and promise) How do you do it? (Practical: How is product produced, challenges, advantages)

2)   Success stories in Internationalization

Most important internationalization stories example countries? What happened? How does your company work? The interviewee is prompted to narrate several stories of successful market entry to most relevant foreign markets. During the narration interviewer follows up with with in-depth questions from the framework of the theory:

What do you think contributed to that event/success factor? How did that contribution start (recruitment, or lucky encounter etc) ? What was the underlying philosophy or attitude or person guiding that decision?

After answers the interviewer analyzes aloud to provoke discussion for more in-depth insights as well as peer-checking the conclusions with interviewee.

3)   Structured part guided by the theory

Preparative notes: With each relevant answer to the main questions, prompt the most suitable follow up question or questions.

•   Would you consider it a significant factor •   What lead to that situation or decision? •   Prompting comment: Could it be that it was because of? (be wary of leading the

conversation on your own presumptions, and ask the interviewee to correct any questionable assumptions you are on your way to make)

Main Questions: 1st) Firm International and Overall performance

•   Sales growth? •   specifically in targeted foreign market

  Profitability?   Other Key Performance Indicators (KPIs) specific to the company? 2nd) Internationalization

•   Entry mode •   Non-Equity

51

•   Direct Exports (more control) •   Sales Rep •   Import Distributors

•   Indirect (little control) •   Trade representatives •   Export management companies etc.

•   Contractual agreements •   Licensing •   Franchising •   Turnkey

•   Equity •   Wholly owned subsidiaries •   Joint venture •   Strategic Alliance

•   Entry Markets and market strategy •   Push or Pull? •   STP process •   Media vehicle campaigns

•   The use of social media platforms •   Allocation of financial resources on marketing activities? •   Timing of entry? •   Trends? •   Together or alone? •   First mover, second mover or late to the party?

•   Do you consider that advantageous?   Product

•   Competition for the product? •   Demand for the product? •   Subsequent press exposure? •   Product superiority? •   Margins? •   Brand recognition? •   National Brand recognition? •   Nordic Brand recognition?

3rd) Environmental Characteristics •   Domestic environment

•   Local support for internationalization?   Internationalization in a cluster?   International environment

•   Economy, bureaucracy and politics? •   Ease of doing business? •   Trends?

4th) Firm Characteristics •   Number of employees? •   Sales culture? •   Organizational structure •   Culture

•   Team spirit in regards to internationalizing? 5th) Entrepreneurs: Human Capital

52

•   International business skills •   International orientation of the company •   Environmental perception •   Management background and know-how •   Recruitments made for international business skills

6th) Entrepreneurs: Social Capital •   Networks

•   Existing or acquired networks   Usage of networks   Recruitments made to gain access to networks

16.2   Appendix 2: Thematic Analysis The following sections shows how each of the extracted citations from the transcript of the interviews were placed into the respective themes according to the coding rules. Category Definition Coding Rules Interview Examples

Starting Up (T1)

Origin of the brand.

Interviewees need to make reference to the origins of the company and/or factors that initiated the idea behind it.

B1

"We were drinking rye whiskey in the sauna and were wondering why anyone is not doing this in Finland."

B1

"(Starting) It was pretty fast, we sent the first emails during the first night we got idea and asked for advice. Especially Miika, our CEO, who is a whiskey connoisseur and had attended some whiskey expos contacted some people he met at the expos. The Company was incorporated two months after the Sauna-night and the we had the whole team assembled within six months of starting. After 9 months we had already gotten the distillery licensing."

B2

"I am a partner in the firm. Vi are four partners. Måns started the company and I applied to part of Sneaky Steve right before the first collection came out. So I started working as a seller and vi have been doing this for almost 10 years now. It’s been an interesting journey and there have been ups and downs but it is a lot easier today."

B3

"I am a partner and I have been with the company since Björn founded it. We are also in a domestic partnership so we live together."

B3

"Björn started in 2012. He started studying to be a brewery technician and wanted extra income on the side. Or lite a hobby."

53

B4

"Well it started when I wanted a bag for bicycling and there was nothing on the 10 market that satisfied my needs, all the bags I had would wear down and break all the time"

B4

"When I was making the bags, I thought about well if I make a really nice one, I could make ten of them and sell the rest to cover 20 the costs since they are pretty high with leatherwork."

B4

"it all just happened, and I still need to organize most of the photos and the drawings from the very beginning to get an idea what happened. But I think it started 2009 or 2010."

B4

"I abandoned it for half a year and kept using my Ortlieb, but when that broke again I was annoyed with the quality of it and the pockets etc. So then we made a new prototype, probably half a year after, because I got frustrated about the Ortlieb breaking again and I thought I got to do something about this."

B4

"(about sales to a new buyer in germany) Sometimes it stops because we maybe have a little bit of a language 155 barrier and cant explain the story well enough, or they are not interested enough about the story."

B4 "But once you tell them about (the story of) Kasperi, they get really stoked."

B4

"We did not really have a refined visual brand at that point, the site was pretty crappy still, so essentially we just had the name that no one new yet. So the Brand was not something that made people say wow or had any kind of brand recognition, but we noticed that when we tell the story ourselves people get very captivated."

B4

"It started very informally so I did not think about a team before. I wanted a 20k revenue and I thought I should get a few thousand from that, but when It grew to that point I realized that if I want to keep this sustainable I had to have about 30k in the production itself so the income aspect of it never materialized. I’m a freelance photographer and there the math is quite different, because you're selling a service. I did not really estimate the costs properly. So from that it started."

54

B4

"Matti and Mikko were from different groups of friends and both really came to me. Mikko suggested it during lunch. He is an old friend of mine who wanted to become a partner because he was really convinced about the product and the local production." "I told Matti that Mikko suggested this to me and then he told me that he has thought about the same thing. We had negotiations and a business plan and we were all pretty aligned with how we thought about Kasperi and realistic as well. Both guys liked the vibe and were in it more for that and they had no unrealistic illusions about it."

Category Definition Coding Rules Interview Examples

Aspirations and Culture (T2)

Entrepreneurial drive factors and mindset of the team behind the brand.

Interviewees need to make reference to the aspirations, core philosophy of the company and/or some element of the entrepreneurial mindset in the firm.

B1

"We want to be the biggest rye distillery by 2020 in the world."

B1

"Maybe is not a very measurable goal (due to lack of purely rye distilleries), but it’s an inspiring goal, since we also want to rise the status of rye distilleries in general."

B1

"It was pretty fast (the start), we sent the first emails during the first night we got the idea and asked for advice. Especially Miika, our CEO, who is a whiskey connoisseur and had attended some whiskey expos contacted some people he met at the 30 expos. The Company was incorporated two months after the Sauna-night and the we had the whole team assembled within six months of starting. After 9 months we had already gotten the distillery licensing."

B1

"What contributed to the drive of the team was that the idea was strong and there was a frustration about that

55

many people always talk about what should be done, but seldom anyone gets anything actually done."

B1

"So we used existing facilities in the testing phase, and when we started getting serious we got some laboratory equipment to do product development with and now it is 2 years from when we started."

B1

"The production started without any experience so we started practicing straight away both with whiskey and gin"

B1

"(On making the gin after whiskey) We needed to figure out something meanwhile(Whiskey takes years to ripe) to support the business."

B1

"(on having a strong domestic market) Of course it gives us the courage as well as success at home kind of drips abroad."

B2

"Our philosophy has always been that we need to be strong in the domestic market before going abroad."

B2

"We have made sure to divide tasks so we can focus on what we are good at."

B2

"We have always thought about going abroad but we saw other brands who wanted to go abroad from the get go and we felt like it was too dangerous to move into the international market without having a solid base to stand on in our domestic market first. We didn’t want to rush."

B2

"(Decision to enter markets) Sometimes it comes out of discussions at board meetings where we express interests for certain markets. Then it is my job to research and contact."

B2

"We learn all the time. We are not fully learned; I don’t think you will ever be. You need to have patience and common sense. I don’t believe I have pushed someone, in terms of selling, to the point where I am embarrassed of myself."

B2 "We have never had any investors in our company so it is just us four

56

guys and sure we might be able to get an investor who could pump a lot of money into the company but that has never been our philosophy."

B2 "If you think it is fun, then you can go very far."

B2

"But also not to be afraid of not having found anything good for the next board meeting because if we don’t find something we like we won’t go into that market."

B3

"We kind of keep doing our thing. We work on the three scents that we have and work on expanding our product line."

B3

"Sales is not the primary objective. We do need to run a business, of course. But we did not start Mr. Bear Family to become filthy rich. We started it because we loved it and we got good feedback and it was fun!"

B3

"Yea exactly. First and foremost. We sell through our online shop internationally too but it is on a very small scale but we keep it because it is fun to have a direct connection with our consumers. But primarily through distributors."

B4 "I always designed and made stuff myself"

B4

"Everyone said don’t make in Finland and don’t make your own metal parts because that is really difficult etc. So I did everything against the advice"

Category Definition Coding Rules Interview Examples

Human Capital (T3)

Qualities, skills and backgrounds of the founders and team.

Interviewees need to make references to the qualities, skill set, and professional background within the firm.

B1

"Out of 4 founding partners 3 partners with management/entrepreneurship know how, two with either formal or informal experience with brewery or spirits."

B1

"Miika, our CEO, was a change consultant within the pharmaceutical industry. I myself am a Civil Engineer, did some Stand-up comics, worked as CEO in two start-ups, I do marketing and branding. Kalle who is our distiller, used to

57

work as a researcher in the chemistry industry and also worked as an entrepreneur in the brewery industry. Jouni had started a logistics company to china when he was 26."

B1

"Everyone in the company has either been on exchange or worked abroad, so everyone has a little international experience. But not really from Belgium, or say from Japan. I’ve lived in Britain and Jouni has lived in Germany."

B1

"Jouni (International Sales) and Miika(CEO). And I pull the brand communications, so basically PR and activating people abroad. And Miika and Jouni do basically sales and get networks etc."

B2

"We don’t really have that international experience. We do have this one guy. Mattias, whom went in as a partner right after me. He has done this journey before. He has worked a lot with distributors and a lot of fashion companies."

B2

"There are a lot of basic things and it might sound frivolous but it’s a lot about common sense and keeping promises."

B2

"Then I do think Måns and I complement each other very well; he is really good at running a business while I am a very loyal, uncomplicated guy, who show trust and stick to my promises."

B2 "We are good at what we do and we love what we do."

B3

"Today we have employed three more. But we did that as late as last summer. So first we took in an employee in the sales department. Then last fall we employed a person to work with our production. Then in the beginning of 2016 we employed out third employee, also to work with our production. 90% of all products we make here."

B3

"No not really. Not inside the company. (answering the question if there were any international experience inside the company)"

B4

"An important point also to be professional, you can’t just be likeable and a fun little brand, you need to be convincing and good to work with. And that professionalism is a first impression."

B4

"(From the partners) Matti on the other hand had been practically an in-house guy and had made the website for us and helped immensely."

B4 "I’m a freelance photographer"

58

Category Definition Coding Rules Interview Examples

Product (T4)

The products of the company

Interviewees need to make references to the development of, the qualities and the appeal of or any factors relating to the product.

B1

"In Finland it has been really good but for example with Spain it would be too late 215 considering the gin boom has already went. However we thought about Spain with whiskey once it gets ready."

B1

"Definitely when the bartenders taste our drinks it, it makes a difference. If you want to succeed, every part has to be perfect, the product has to be super good..."

B2

"I think we have a really good product. It is a good commercial product which is easy to like."

B3

"Our beard brew was in a bottle first, but now we have added a little pipe inside it. And that was due to feedback from our customers. It has also gotten packaging around it. So we base a lot from what we want to do and feedback from our customers."

B3

"Everything went very fast for us. I guess we did think about expanding internationally long term but it all went a lot faster than we had planned so we did not really have time to set up a plan or a strategy."

B3

"We also feel kind of spoiled because we have not reached out to distributors that much but they have mostly come to us. So we have been lucky that so many of those have turned out to be a good match with our company and we’ve just kept building on those relationships."

B3

"A lot of other small Swedish companies that expand abroad go to the Nordic countries first because it is easier. We almost done the opposite. In Europe we had a strong demand in Germany, Poland and the Benelux countries before going into other Nordic countries almost a year later."

B3

"The plan was to stick to the Swedish market first. But we have been very lucky with the contacts we have built up and our distributors are very good and they themselves promote us a good amount of their own fairs and such. We didn’t really have that option ourselves."

B3

"The German market was early. I am not sure if they were first but they were the first to successfully spread our brand in their market. Then Poland. We have been able to kind of follow the beard trend spreading in Europe and then we have managed to match that with supplying to those countries"

59

B3

"So far we have mostly been contacted. Basically from day two. (Answering the question if they have had to reach out to distributors)"

B4

"It is a functional, long lasting, bag that should be versatile, good looking and sustainable, and there are many others types of bags for different needs."

B4

"For me it is also very important that I can go to the workshop in a few hours and it makes us also very flexible, once all the material supply chain is organized well. Another important thing is that it is all fair for the makers, there are no sweatshops, we take sustainability into account in our material choices."

B4

"And you really see how people get psyched up about that we are making in Finland, so the Market likes it a lot, and in five years time the atmosphere has gotten a lot better in this regard. When I started it felt that all the makers were almost dead and the industry was also very skeptic about what I was doing."

B4

"There were pretty many shops who liked it but acknowledged that our margins for the retailers were pretty bad but they liked the product enough to consider it."

B4

"wanted to know the materials, the production, the certificates of the leather etc. That seemed to be a very German quality to get as detailed of an explanation of the product as possible. Another really good argument there was that we make everything in the Nordics."

B4 "My feeling was that it was more about the product, we did not bond much at all."

B4

"This is something that we noticed is a challenge when we are selling in clothing shops. Our margin is considerably less than the industry standard because we buy local highest quality raw materials, use local labor and design all the hardware ourselves.The industry standard on the other hand is cheap raw"

Category Definition Coding Rules Interview Examples

Branding Strategy (T5)

Strategy of the company to manage its brand

Interviewees need to make reference to elements that contribute to their branding strategy, brand or marketing

B1

"In Japan we are on schedule, so to say. We are on the shelves of a few specialty alcohol stores and in the best cocktail bars, which is a part of our branding strategy."

60

communications of the company

B1

"We also aim that our products would be in at least 4 out of the top 10 cocktail bars in each country."

B1

"We have a general international marketing strategy. So we start with the high end bars and drop down from there."

B1

"The story of the brand has to be good, and the founders have to be likeable people. And of course in this industry the brand is very important, and in a way a part of the product itself. You can affect the tasting experience also what you associate to the tasting event itself. For example if you suggest that here you can taste a little bit of pineapple, quite often people will find that pineapple from there."

B1

"Well we are going to concentrate that the Brand and the Products meet the international standards of quality, and that from these “craft-alcohol” type brands we will be the best ones to work with to the distributors."

B1

"Personal relations are important but the story and the product are definitely extremely important. If you can also communicate your product so that when you are presenting it to a potential distributor they will instantly feel like there is something here and that they want to be a part of it. Very few brands can do it and if you can achieve that, then it makes all the other work much easier. The better you take care of the specific aspects such as personal relationships, the story and the product the easier internationalization will be as a whole."

B1

"In general if you are relentless and people see that when you are at an expo for example, it really helps in business. Equally, whatever is perceived as “professionalism” it can help you go far!"

B2

"We want there to be a common thread. Some countries have run their own thing and it doesn’t really go along with our core idea."

B2 "In Germany, however, we do contact the stores ourselves. The ones we want to

61

work with like Warmland, Gortz and Zalando."

B2

"We have been getting a lot of positive response not only because we make shoes but also because we try to package the whole experience."

B2

"Then on the new boxes we will have some text and a little story about us and stuff. Everything needs to follow a thread. Be persistent. Stick to the image. Which needs to be genuine."

B3

"I think that consumers today are very aware and they are looking for a holistic experience. You have some consumers who don’t really give two cents about the products, they just kind of take the ones that work for them, but being transparent and genuine. That works. That is at least how we feel."

B3

"But it has just spread very fast. Sharper, a barbershop here, were good for us in the beginning. They sold our stuff. Then some local shops. Sneaky Steve for example."

B4

"(On communications) Since the marketing is so imperative really and everything will just dive if the marketing is not consistent"

B4

"Our strength is really in the authenticity of our brand and we notice how stoked people get with being just ourselves and telling everything how it is.

B4

"We want to be ourselves and our existing customers really appreciate that and we believe that once we get our communications stronger there are much more people your are ready to buy to that idea."

B4

"Communications has been really important, we notice it reflects a lot with sales and we don’t have enough resources and commitment because it’s a side thing for all. So this affect a lot of our thing."

Category Definition Coding Rules Interview Examples

Opportunity and

Knowledge Creation (T6)

Direct or indirect actions leading to the creation of an opportunity

Interviewees need to mention factors relating to active or informal efforts to discover opportunities or seek knowledge related to internationalization.

B1

"Japan started out when Miika was in Nisoko skiing during vacation and found an interesting bar. One of the bars founders visited us in finland and bought the first barrel

62

of whiskey. He was really stoked with our thing."

B1

"We realized that Japan is an extremely important market, especially because they appreciate whiskey and appreciate Finland."

B1

"(On getting out there and creating opportunities) Yeah it feels like in this business there are quite a lot of those lucky strikes."

B1

"The small one we found from the Bar Convention in Berlin, a Bar expo. We actually met the guy by chance sitting next to him and talking about Gin, and he said “well we have quite many good gins” and we responded "well you don't have this good gins""

B1

"It’s a good place to meet people yes. A lot of the important people from the industry. We found out about the expo from some Finnish bartenders. Things really just unfold when you talk to people daily and talk to the right people."

B1

"I feel like expos have been a little overrepresented in this discussions, because most of the work really happens when we go to the location: Go to the best cocktail bars, figure out where they buy there products, talk to the bartenders, check the distributors backgrounds, arrange meetings and try to close those distributors. That is how we generally work."

B1

"Often we find the networks on the way, and of course we actively also search for them."

B2

"We have exhibited at fairs and distributors have been coming to us from the get go."

B2

"Now we have enough experience so we can invest money in countries we believe in."

B2 "When you have worked for ten years and been at fairs and expos

63

for ten years then if you haven’t been completely socially incompetent then you most likely have made a few friends."

B2 "In Sweden we exhibit at fairs."

B3

"Of course you do have an eye towards the market to see how the competition works and so on. But primarily we look and listen to our customers. That is how we have grown and developed."

B3

"I mean you work until you face an obstacle and if you do not have the knowledge on how to surpass it then you try to research it. So customs. Sure, what do they want? If you get that information, then it makes it easier."

B3

"We are going to put a lot more focus on that, also internationally. We do attend smaller events in Sweden because we value meeting our customers directly. So we might display at, lets say, a food court in Växsjö, and that kind of helps spread your brand and lets you have a dialogue with your consumers."

B4

"Originally we thought about going to Sweden first but then there was some organic demand from Germany online and we had a online campaign through an offer website that is pretty big in Germany and that was kind of a market research for us to figure out is it possible to sell well in germany without any brand awareness with these prices and online. Of course they had a discount on it but we really noticed that yes people want it. Then we also got messages from our friends and customers that why don’t you try Germany, so we went there."

B4

"We had contacted some shops beforehand but nobody really answered so we decided just to go to Berlin and march to the shops."

B4 "Both of them got really

64

interested and they wanted to know everything and that was a sign for us, because these are the things we are interested of and we want our retailers to be interested of that too."

B4

"If they would sell well I would still be willing to have a business relationship like that because there is always going to be those people who are not going to be your best friends. If you only work with people who you like, you will be closing a lot of opportunities."

B4

"If we went to a trade show called Sigg in Berlin that cost about 10k, at that point we would probably also adjust a little to the standard of being very sales oriented because they are huge trade shows and people don’t have much time to stay and talk with you. You will make contacts and sales, and you can build on those contacts afterwards but there you are paying for the time and you should"

B4

"However now that we are doing it a little differently by marching into shops, and talking with people there as long as it takes. Because at that point its not a good impression to leave because of hurry if you had a good talk."

B4

"And on top of that we made the mistake of going to another shop and selling them the product so that this better company called it off because of that. There was maybe a lack of communication about that they wanted exclusivity or maybe they thought it was implicit at that situation and we should have understood that."

B4

"Now we are very much smarter about that and it was a great lesson learned."

65

B4

"We need to network really well both nationally and internationally. We need to figure out how to keep those relationships engaged and help each other. This is especially important for getting the production and supply chain reliable and functional locally. We need to be persistent with all of that. But now we have a little bit of a reality check, we know what needs to be done, but we need to get everything fluid."

Category Definition Coding Rules Interview Examples

Network Management (T7)

Management of professional relationships

Interviewees need to make reference to actions that relates to acquiring, developing, maintaining, evaluating and/or discarding business relationships.

B1 "Before the expo (tradeshow) we had visited Japan already a few times to get know people and after the expo we closed our first importer."

B1

"He just talked with them and talked about the rye whiskey and we got lucky because the guys were anyway visiting Europe so they visited us on the same trip."

B1

"We visit often and its quite a personal business, so you need to build close relationships and get to know the people in the know and be a “good guy” in their eyes as well."

B1

"We started with a big distributor in Germany and ended up changing to a smaller one. Because the big distributor was not actively selling and promoting our product so we figured its better to have a small one who can be more personal and activate the brand abroad."

B1

"We had number one drinks who we found through a Finnish distributor. Although there were several who were interested but this one ended up being ours."

B1

"Well I’d say it’s definitely not sales, but It’s a combination of many things like marketing and maybe business intelligence or something like that."

66

B1

"Well it has obviously been pretty critical, for example there was a story by VICE about us because Totti from Makia Clothing had known someone who knew the journalist and passed on the word. that we would have not gotten recently. As well as the Belgian distributors we got through contacts. Through contacts you also get to many distributors."

B1

"(About the advisory boards role) Everyone is going to have a role, but the biggest role is probably still in the future. For example when we go to the states we will see what will happen.."

B2

"You know, going to your distributors, sit down with them and take time to discuss what you can do for their market."

B2 "Care about them and give them time."

B2

"Networks have helped us a lot. I have started up most countries through connections."

B2

"You can stand at a fair in, lets say Berlin, and you may get an abundance of interesting prospects in all kinds of countries but its kind of like the good jobs in our business; they are not really posted on job sites, you get them though networks."

B2

"Then we have had a few others that we have decided to drop during this journey because things didn’t work out."

B2 "Then I have to find the time to travel and meet all our distributors too."

B2

"We meet our distributors and bigger customers like Zalando and Wormland and they come up to us and hang out with us in the hotel. Listen to some good music and chill on the couch. It really creates a different environment instead of loud music at a fair."

B2

"We have worked with people who are no fun at all and it normally doesn’t work."

B2

"Then we have some that we feel that if things turn south in the business relationship then we still have a personal relationship with them."

67

B2

"We have had some agents but we haven’t felt that that was too successful."

B3

"Networks are incredibly important. Whatever market or industry you work in. If we count our ’beard network’ it has helped us a lot. It is a lot of mouth-to-mouth in this industry, and that is how we have spread. We might have worked with someone in Germany or Italy and then they meet someone is, lets say, Spain who are looking for something similar and then they give them our contact info and yea. That is how its works."

B3

"We work as support for our distributors and you kind of have to balance how they work and how we work and how you want them to work with our brand. Some might be very active and then we might help them a great deal and provide as much support as we can. We try to adapt to the needs of our distributors so to say. Do what we can to help them in their markets."

B3

"I mean yes and no. Our Italian distributor, which we have been working with now for two years, they made an active choice to contact us. So from their end it is not an element of randomness but for us it kind of was. But yea like we spoke about before, networks. Those are very important. Being out, talking to people, all sorts of people. That does a lot for your business."

B3

"We have been in contact with some barber shops here that have some a location in L.A., sort of about going that route. Then we have a distributor that has a channel via New York to it would be fun to go from both coasts. We will see."

B4

"We are buying our leather now from Sweden and it is weird that we also had to contact them several times to get an offer, even if we visited and talked about it and it was supposed to be fine."

B4

"We were supposed to keep more in contact and go there to do a launch event and try get some press contacts and do it properly but it was around the same time as Mikko could not make it and then the contact also deteriorated

68

with the shop that was selling the products and the momentum dies very fast."

B4

"With a Swedish retailer that has been excited about us we met at a trades how and visited after and agreed on getting the bags there on sale. He was the type of 210 person that we connected with and it was somehow very transparent and honest. Also the fact that we were both from Nordic countries in a German trades how could have been a factor. His shop also matched our philosophy almost perfectly, so the product concept matched with the shops concept. We also were in a tradeshow that was a little bit alternative to the industry standard 215 of fashionable things, and he was kind of counter all that obvious stuff and came to this tradeshow to do discoveries. But now we haven’t also heard so we just need to visit again and take the bags to him. Many retailers seem to be little slow in their process and a friend company of ours making bicycles had to visit this"

B4

"Yea so like the example from Germany they were really helpful and had contacts on press, they wanted to launch us in Germany and they wanted to work for us but the people on the other hand was a little difficult."

Category Definition Coding Rules Interview Examples

Network Engagement (T8)

Engagement of nodes inside a network

Interviewees need to make reference to business relationships considered particularly important for the internationalization of the company to a specific market or in general.

B1

"Everywhere else it has been quite slow and steady, except in Belgium they grew more rapidly sinc

B1

"Yea the guys there are really enthusiastic to grow and they are concentrating on our brand. Whereas in Japan they don’t really have the same drive to grow, and 165 on the other

69

markets there has been a little less drive from the distributors to grow and maybe also the UK market is quite competitive in general."

B1

"(On finding the right people) Yea, that seems to be the case in almost everything. People make a big difference and of course how the company operates. This distributor though was only a two person company."

B1

"Relationships with the bar people is extremely important and we build those relationships with meeting up with the people and help them know our brand and sell it in the best way possible"

B1

"Jouni (International Sales) and Miika (CEO). And I pull the brand communications, so basically PR and activating people abroad. And Miika and Jouni do basically sales and get networks etc."

B1

"I mean by that is that there is always someone who visits Finland and then gets excited about the brand and talks about it when they get back home."

B1

"But of course it is a big plus side! However we collaborate with people who have networks, for example we gathered an advisory board of experienced business influencer who already have quite good networks. For example former Altia CEO Antti

70

Pankakoski, Alf Rehn a professor and thinker, Elina Koivumäki a consultant and an American businessman who can help us later on when we expand later!"

B1

"Well actually most people contacted us. Antti Pankakoski contacted us, Alf Rehn we contacted and he brought Elina, and Donald I met in Ireland at a tech expo and we met in a liquour store."

B1

"Personal relations are important but the story and the product are definitely extremely important. If you can also communicate your product so that when you are presenting it to a potential distributor they will instantly feel like there is something here and that they want to be a part of it.Very few brands can do it and if you can achieve that, then it makes all the other work much easier. The better you take care of the specific aspects such as personal relationships, the story and the product the easier internationalization will be as a whole."

B4

"There are a lot of designers but they don’t collide with makers on this playfield, in a way they don’t go in the same networks."

B4

"We should have concentrated to just finding good partnerships instead of offering many shops, since some were also offended by that and we

71

had not thought about that."

B4

"We realized that a large network of sellers, without having a distributor is really difficult and can kill this small business."

B4

"Our experience and resources really tells us that we no longer try to get many retailers, just partners that can help us spread our brand awareness and represent us better. It is also logistically and easier production wise in the beginning."

B4

"However when we go to cycling shops they are used to a little lower margins and customers come to the shops prepared to consume more than in a clothing shop on average so."

Category Definition Coding Rules Interview Examples

Support Networks (T9)

Supporting activities from external sources which adds value to the focal firm

Interviewees need to make reference to an informal relationship that has been helpful in the internationalization of the company. B1

"We went to foodex expo close to Tokyo afterwards. We found out about the foodex expo from a program called “Food from Finland”, where we had a shared department with the other guys in the program."

B1

"Yea so the distributors was found through some Finnish guys who make Finnish rum and they had scouted this specific distributor and felt like they could be interesting but maybe a little too small for them. So they hooked us up."

B1

"We do collaborate with other companies in terms of PR efforts etc. Food from Finland was an example of going

72

together though. As well as we also go together with another distillery to some trips to expos. However it is quite informal, for example if we get a good contact or hear about some good stuff, we pass on the contact or that info."

B2

"The latest country we entered, the UK, was through a guy I knew there who ran a business. Then that may only be the first step, because you also need to have a good product, but yea the first step if often through networks."

B2

"We had a good relationship with this guy and he didn’t want to ruin anything for us so he told us that he was going to find someone for us and he did and that is the distributor we have today and they are awesome"

B4

"In our co-working workshop and we had a cool atmosphere also, there were people from many backgrounds and people were making a lot of interesting things, so that was encouraging and helpful."

B4

"Well, an enabling factor there was that I knew a sewer through my friend Aamu and Juuso who also started from our workshop and now run an art shop. She made my first prototypes, which were made from tarps."

Category Definition Coding Rules Interview Examples

Institutional Support (T10)

The impact of institutes aiding the focal firms

Interviewees need to make reference to the use of institutional support including consultation, grants and subsidies etc.

B1

"Governmental support was useful for assisting with trips."

B1

"Tekes has a grant that is useful, and it is good for financing the trips involved however it

73

involves a reporting that is a little challenging."

B1

"If the support is trying to help you in the micro aspects of business such as arranging meetings etc, it seldom helps, because those skills the entrepreneurs themselves should know best. In your core business you always have to develop, because if you go on a supported export trip and expect all the meetings to be arranged, it just doesn’t seem to work like that, or I don’t know anyone to whom it worked."

B2

"I know that when we tried to find a good distributor in the UK, we used Exportrådet. We didn’t find it useful though so we have always managed on our own. It is more via networks with we talked about earlier."

B3

"When it comes to governmental programs and other things like that, that isn’t something we have sought help at at all. If we have needed help we have looked it up or gotten help from friends and family. Then I mean it is a lot of learning by doing."

B4

"Now there is some new good internationalization support for SMEs in Finland 235 where you can get 50k for going abroad without any loan for the company."

B4

"We are a part of a lifestyle brand export program that is organized by Finpro and some consultants who really know the industry, and the good thing is that the program is subsidized by the government."

B4

"it has been pretty useful, like they 240 have these trainings and they invited some Swedish and Danish brands to talk about their success and branding in addition to sales training etc."

B4

"What I would like would that it would be more concrete, now we are just doing more exercises, but if it would be that do this exercise live, for example in Stockholm I think everyone would learn more"

B4 "There is for example one brand that is there for the

74

second time and they think its ok but they are not getting what they want. Its more about spreading knowledge making networks and getting a good mindset."

B4

"(Benefit of the finpro program) You get in the local scene and get to know all the people working on the same stuff as you are working on."

Category Definition Coding Rules Interview Examples

Awareness of Limitations and Capabilities (T11)

The awareness of limitations and capabilities.

Interviewees need to make references to their own challenges, limitations or other factors and/or how does that affect their decision-making.

B2

"There has been a lot of competition in the markets. Some markets are hard to enter, like Germany, because it is such a large market and a distributor will have their sub-agents who work in different parts of the country. "

B2

"Then there are always the home-brands, made by the stores themselves. They can be a barrier to enter a market because they get such large margins that it is hard to compete with. If it was easy then everyone would be doing this. But it is not. Distribution is hard."

B3

"A lot of new brands have been popping up. Both in Sweden and internationally. We were alone here in the Swedish market for a while. But I guess it’s the trend everyone is trying to get in on. A few actors on on the market prior to the big wave on companies and then after the wave a lot of companies fade out and the ones who thought long term remain. That’s usually how it is."

B3

"I think our biggest problem has been Russia. They don’t make it easy for you. But yea like I said, good relationships."

B4

"When the industry was built in the 40s and 50s, a lot of the products were sold to the soviet union and design was maybe not a priority or marketing or luxury etc."

B4

"We have some challenges also in the supply chain and because some of the raw materials like the vegetable tanned leather has quite a long lead-time and so 100 when we run out with leather it is usually a little chaotic getting everything to the retailers that they asked."

75

B4

"So we are concentrating on getting that to work because if you don’t have the product you jeopardize everything from networks to trust and reputation."

B4

"Some shops got really excited from our story and at that point we gave some bags for them to try sell on an account basis, but somehow they were not able to communicate the bags to the customers, and of course with an account they don’t have any risks or pressure to sell."

B4

"We may also be lucky with them because they were saying they could sell quite a lot and at that point our production was still quite unstable and we could have not kept up with the demand in our production"